Natural Gas Price Prediction – Prices Form Outside Day Ahead of Hurricane Landfall

Natural gas prices declined on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 50 Bcf build in stockpiles according to survey provider Estimize. Hurricane Laura was upgraded to a category 4 storm, and will likely be a devastating event for areas of Louisiana and Texas. Landfall on the storm is expected late Wednesday or early Thursday. The weather is expected to be cooler than normal throughout the upper mid-west according to the most recent report from NOAA.

Technical Analysis

Natural Gas prices whipsawed generating an outside day which is a higher high a lower low and a lower close. This is considered a reversal pattern, which means that expectations from the Hurricane are already priced into natural gas. Support is seen near the 10-day moving average near 2.39. Resistance is seen near the August highs at 2.56. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 71, accelerating lower from oversold level which reflects accelerating negative momentum. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a declining trajectory which points to consolidation.