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Natural Gas Price Prediction – Prices Drop Following Inventory Build

By:
David Becker
Published: May 7, 2020, 19:23 UTC

Expectations were for a 98 Bcf build in stockpiles

Natural Gas Price Prediction – Prices Drop Following Inventory Build

Natural gas prices dropped for a second consecutive trading session on Thursday following the Department of Energy’s inventory report. Expectations were for a 98 Bcf build according to survey provider Estimize. The weather is expected to be much warmer than normal on the west coast and much cooler than normal on the east coast according to the most recent report from the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices continued to move lower dropping another 2.2% following a drubbing on Wednesday that saw natural gas fall more than 9% after breaking out above trend line resistance on Tuesday. Support is seen near the 50-day moving average at 1.88. Resistance is seen near the 10-day moving average at 1.95. Short term momentum turned negative as the fast stochastic generated a crossover sell signal. This follows a buy signal created on Tuesday. Medium-term momentum is neutral but turning negative as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The MACD line is poised to cross below the MACD signal line generating a crossover sell signal.

Natural Gas Storage Rise More than Expected

Natural gas in storage was 2,319 Bcf as of Friday, May 1, 2020, according to the EIA. This represents a net increase of 109 Bcf from the previous week. Expectations were for a 98 BVcf build. Stocks were 796 Bcf higher than last year at this time and 395 Bcf above the five-year average of 1,924 Bcf. At 2,319 Bcf, total working gas is within the five-year historical range.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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