Natural Gas Price Prediction – Prices Fall Following Inventory Report
Natural gas prices slumped on Thursday following the Energy Department’s report on inventories. Despite a report that was in line with expectations, traders took profits after the recent rally. There are now two tropical storms in the Atlantic, one is headed right for the Gulf of Mexico and is likely to hit natural gas infrastructures. The other appears to be headed for the eastern Gulf of Mexico and could hit the west coast of Florida. The weather is expected to remain warmer than normal in the southwest generating additional cooling demand.
Natural gas prices dropped on Thursday, declining nearly 3%. Support is seen near the 10-day moving average at 2.28. Resistance is seen near the August highs at 2.47. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 81, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.
Inventories Rise in Line with Expectations
Natural gas in storage was 3,375 Bcf as of Friday, August 14, 2020, according to the EIA. This represents a net increase of 43 Bcf from the previous week. Expectations were for a 45 Bcf draw. Stocks were 595 Bcf higher than last year at this time and 442 Bcf above the five-year average of 2,933 Bcf. At 3,375 Bcf, total working gas is above the five-year historical range.