Natural Gas Price Prediction – Prices Fall Following Inventory Report

Natural gas prices reversed course on Thursday, dropping 7.5% after rising 5.5% on Wednesday. This followed an inline build in natural gas inventories. The weather is expected to be colder than normal throughout the mid-West over the next 6-10 days but then turning milder throughout most of the West Coast. There are no significant tropical disturbances in the Atlantic that are treating to become a tropical cyclone over the next 48-hours. Consumption is beginning to rise.

Technical Analysis

Natural gas prices reversed lower falling 7.5% after rising more than 5.5%, Support is seen near the 10-day moving average at 5.47. Short-term momentum reversed and turned negative as the fast stochastic generated a crossover sell signal. This comes after prices were signaled as overbought. The fast stochastic was printing a reading of 92, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) 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).

Inventories Rise in Line with Expectation

Natural gas in storage was 3,548 Bcf as of Friday, October 22, 2021, according to EIA estimates. This represents a net increase of 87 Bcf from the previous week. Expectations were for a 87 Bcf build according to survey provider Estimize. Stocks were 403 Bcf less than last year at this time and 126 Bcf below the five-year average of 3,674 Bcf. At 3,548 Bcf, total working gas is within the five-year historical range.