Natural Gas Price Prediction – Prices Fall Forming Outside Day Reversal

Natural gas prices dropped on Thursday following the Energy Departments’ weekly report on stockpiles. Prices declined by nearly 4%, after forming an outside day. The weather is expected to be warmer than normal over the next two weeks which should help buoy cooling demand. There is no tropical cyclone activity currently in the Atlantic or Gulf of Mexico.

Technical Analysis

Natural gas prices moved lower on Thursday forming an outside day. This is a higher high and a lower in conjunction with a lower close. This is a reversal pattern that usually ends an uptrend or a correction. Resistance is seen near the 10-day moving average at 1.78. Target support is seen near the June lows at 1.51. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram prints in the black with a decelerating trajectory which points to consolidation.

Inventories Rose in Line with Expectations

The Energy Information Administration reported on Thursday that natural gas in storage was 3,178 Bcf as of Friday, July 10, 2020. This represents a net increase of 45 Bcf from the previous week. Expectations were for a 45 Bcf build according to survey provider Estimize. Stocks were 663 Bcf higher than last year at this time and 436 Bcf above the five-year average of 2,742 Bcf. At 3,178 Bcf, total working gas is within the five-year historical range.