Natural Gas Price Prediction – Prices Fall on Large Inventory Build

Natural gas prices moved lower on Thursday following the Department of Energy’s inventory report. Prices gave back all of Wednesday’s gains, slumping more than 2.6%. The weather is expected to remain warm in the southeast for the next 6-10 days but is expected to become milder over the 8-14 day period. Working gas in storage came in larger than expected as demand likely decline and production increased.

Technical Analysis

Natural gas prices moved lower on Thursday in the wake of a larger than expected build in natural gas inventories. Prices were unable to pierce through resistance near the 10-day moving average at 2.61. Support is seen near a horizontal trend line that comes in near 2.51. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occur as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signl line (the 9-day moving average of the MACD line). The fast stochastic also generaged a crossover sell signal which points to acceleratin negative momentum.

The EIA Reports A Larger than Expected Build in Stockpiles

The Energy Information Administration reported on Thursday that working gas in storage was 1,867 Bcf as of Friday, May 24, 2019. This represents a net increase of 114 Bcf from the previous week. Expectations were for a 106 Bcf increase according to Estimize. Stocks were 156 Bcf higher than last year at this time and 257 Bcf below the five-year average of 2,124 Bcf. At 1,867 Bcf, total working gas is within the five-year historical range. The trajectory of inventories builds points to stockpiles reaching the 5-year average by July.