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David Becker

Natural gas prices rose slightly on Thursday following an inventory report from the Department of Energy. Prices have been trading under pressure as productivity has soared and production has overwhelmed consumption. With commercial operations just starting to ramp up, electrical demand has been weak allowing natural gas inventories to pile up which has weighed on prices.

Technical Analysis

Natural gas prices are attempting to form a bottom and are hovering near the bottom end of the weekly range at 1.72 just above the August contract low at 1.68. Short term momentum remains neutral as the fast stochastic moves sideways. The current reading on the fast stochastic is 15, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

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Inventories Rise In Line with Expectations

Natural gas in storage was 2,892 Bcf as of Friday, June 12, 2020, according to EIA. This represents a net increase of 85 Bcf from the previous week. Expectations were for a 85 Bcf draw according to survey provider Estimize. Stocks were 722 Bcf higher than last year at this time and 419 Bcf above the five-year average of 2,473 Bcf. At 2,892 Bcf, total working gas is within the five-year historical range.

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