Natural Gas Price Prediction – Prices Form Outside Reversal Day Ahead of Inventory Report

Natural gas prices formed an outside day and closed near the highs of the trading session. This comes ahead of cooler than expected weather that should cover the mid-west over the next 6-10 days. The Energy information Administration is scheduled to release its inventory report on Thursday. Expectations are for a 85 Bcf draw according to survey provider Estimize. U.S. natural gas consumption was lower in 2020 in all sectors except electric power.

Technical Analysis

Natural gas formed an outside day and closed near the highs which is a reversal signal. Prices have been forming a bear flag pattern but this movement could reverse the downward trend. Support is seen near the March lows at 2.61. Resistance is seen near the 50-day moving average at 2.72. The 10-day moving average is poised to cross below the 50-day moving average which would mean that a short-term downtrend is in place. Short-erm momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 19, below the oversold trigger level of 20 which could foreshadow a correction.

US Natural Gas Consumption in 2020

US natural gas end-use deliveries in 2020 decreased in three out of four consuming sectors relative to 2019, according to the U.S. Energy Information Administration. Despite mild winter weather and the economic effects of COVID-19, the second-highest annual amount of natural gas was delivered in the United States to end users in 2020, averaging 75.8 billion cubic feet per day for the year.