Natural Gas Price Prediction – Prices Drop Following Inventory Report

Natural gas prices moved lower on Thursday as tropical storm Isaias formed in the Atlantic. The storm is headed toward the Gulf of Mexico but is expected to turn toward Florida. There is also a new disturbance that has moved off the coast of Africa, which has a 50% chance of becoming a tropical storm. The weather is expected to remain warmer than normal for the next 8-14 days. Inventories increased by slightly more than expected according to the Energy Information Administration.

Technical Analysis

Natural gas prices moved lower on Thursday dropping 5.5% and making a lower high and a lower low. Support is seen near the 10-day moving average at 1.80. Resistance is seen near the 50-day moving average at 1.82. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a flattening trajectory which points to consolidation.

Inventories Grow by More than Expected

Natural gas in storage was 3,241 Bcf as of Friday, July 24, 2020, according to the EIA. This represents a net increase of 26 Bcf from the previous week. Expectations were for a 24 Bcf build according to survey provider Estimize. Stocks were 626 Bcf higher than last year at this time and 429 Bcf above the five-year average of 2,812 Bcf. At 3,241 Bcf, total working gas is within the five-year historical range.