Natural Gas Price Prediction – Prices Drop on Larger than Expected Inventory Build

Natutural gas prices moved lower on Thursday following a larger than expected build in natural gas stockpiles according to the Department of energy. The weather is expected to moderate during the first two weeks of May, which will reduce both heating and cooling demand putting downward pressure on prices. Most of the build in natural gas inventories came in the south central of the United States, followed by the East and the Midwest.

Technical Analysis

Natural gas prices sold off on Thursday, generating an inside day which is a sign of indecision. Prices are poised to test resistance near the April highs at 2.72. Support is seen near the 10-day moving average at 2.53. Short-term momentum continues to whipsaw, yesterday generating a crossover buy signal and reversing on Thursday.  The current reading on the fast stochastic is 59, which is in the upper portion of the neutral range, but still reflect consolidation in prices. The MACD (moving average convergence index) generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line. The MACD histogram, is printing near the zero index level with a flat trajectory which points to consolidation.

Inventories Rose More than Expected

The Energy Information Administration reported on Thursday that working gas in storage was 1,462 Bcf as of Friday, April 26, 2019. This represents a net increase of 123 Bcf from the previous week.
Expectation had been for a rise of 110 Bcf according to Estimize. The miss, put downward pressure on natural gas prices. Stocks were 128 Bcf higher than last year at this time and 316 Bcf below the five-year average of 1,778 Bcf. At 1,462 Bcf, total working gas is within the five-year historical range.