Natural Gas Price Prediction – Prices Fall Despite Smaller than Expected Inventory Build

Natural gas slammed lower but finished the session off the lows of the day. This came despite a smaller than expected build in natural gas inventories reported on Thursday by the Department of Energy. The weather is also expected to be much colder than normal over the next 6-10 and then turn slightly milder over the 8-14 days forecast according to the latest estimates from the National Oceanic Atmospheric Administration. There are no disturbances that are expected to form tropical cyclones over the next 48-hours.

Technical Analysis

Natural gas prices declined nearly 1% but rebounded substantially from the session lows which coincided with support near the former breakout level of 2.73. A break of this level would lead to a test of the 10-day moving average at 2.70. Resistance is seen near the November highs at 2.91. After this level target resistance is seen near the May highs at 2.98. Short term momentum is turning negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 77, which is a decline from 85 on Wednesday which reflects accelerating negative momentum. Medium-term momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.

Gas Builds Less than Expected

The Department of Energy reported on Thursday that natural gas in storage was 3,729 Bcf as of Friday, November 1, 2019. This represents a net increase of 34 Bcf from the previous week. Expectations were for a 53 Bcf build according to surveyor Estimize. Stocks were 530 Bcf higher than last year at this time and 29 Bcf above the five-year average of 3,700 Bcf. At 3,729 Bcf, total working gas is within the five-year historical range. The trajectory of the builds in stocks has flattened and will likely continue with the colder than normal weather through the east coast.