Natural Gas Price Prediction – Prices Drop Sharply Following EIA Inventory Report

Prices tumble on inventory build
David Becker
Natural Gas

Natural gas prices tumbled on Thursday continuing its downtrend following a larger than expected rise in natural gas inventories reported by the Department of Energy. The tractor of inventory increases has been substantial as the weather has remained milder than normal for this time of year which has weighed on cooling demand. This comes as production continues to rise and accelerate according to the EIA.

Technical Analysis

Natural gas prices tumbled on Thursday falling nearly 3.5%, following a larger than expected drop in natural gas inventories. Prices are now poised to test the May 2016 lows at 1.91 and then the 2016 lows at 1.61. Prices are oversold. The RSI (relative strength index) which is a momentum oscillator that measures overbought and oversold levels as well as accelerating and decelerating momentum, is printing a reading of 29, below the oversold trigger level of 30 which could foreshadow a correction. The fast stochastic is printing a reading of 14, below the oversold trigger level of 20 which also could foreshadow a correction. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Rose More than Expected

The Energy Information Administration reported on Thursday that working gas in storage was 2,203 Bcf as of Friday, June 14, 2019. This the rise represents a net increase of 115 Bcf from the previous week. Expectations were for a 104 Bcf increase in natural gas stockpiles according to Estimize. Stocks were 209 Bcf higher than last year at this time and 199 Bcf below the five-year average of 2,402 Bcf. At 2,203 Bcf, total working gas is within the five-year historical range. Despite stockpiles being below the 5-year average range, the trajectory is pointing to rising inventories, and with production continuing to rise at a rapid pace, inventories are expected to soon eclipse the 5-year average.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.