Natural Gas Price Prediction – Prices Drop Despite Small Inventory Build

Natural gas prices continued to trend lower as negative momentum perpetuated. The Department of Energy released its inventory number a day early since it’s a Federal Holiday on Thursday. The weather is expected to be warmer than normal throughout most of the mid-West and the West and more relaxed than average in the south East during the next two weeks.

Technical Analysis

Natural gas prices dropped on Wednesday, dropping below support which is now resistance which is an upward sloping trend line near $4.95. Resistance is seen near the 50-day moving average at 5.34. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 9, below the oversold trigger level of 20. Medium-term momentum is negative. The MACD (moving average convergence divergence) histogram is printing in negative territory with a declining trajectory which points to lower prices.

Inventories Rise Less than Expected

Natural gas in storage was 3,618 Bcf as of Friday, November 5, 2021, according to EIA estimates. This represents a net increase of 7 Bcf from the previous week. Stocks were 308 Bcf less than last year at this time and 119 Bcf below the five-year average of 3,737 Bcf. At 3,618 Bcf, total working gas is within the five-year historical range.