Natural Gas Price Prediction – Prices Rally Ahead of Inventory Report

Natural gas prices shot up 2% on Wednesday ahead of Thursday’s inventory report from the Department of Energy, Expectations are for natural gas stockpiles to increase by 106 Bcf according to estimize. Last week, the Energy Information Administration reported a 100 Bcf build compared to the expected 107 Bcf build. The weather is expected to remain warmer than normal in the southeast for the next 6-10 days and then it is expected to become more mild. Supply in the latest week was flat, despite continued increases in production of oil. The trajectory of inventories is beginning to climb, at a rate that looks like it will returns to the average level for this time of year buy the time July comes around.

Technical Analysis

Natural gas prices rallied 2%, settling above resistance which is now support seen near the 10-day moving average at 2.61. Additional support is seen near an upward sloping trend line that comes in near 2.55. Resistance on natural gas is seen near the May highs at 2.70. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading of the fast stochastic is 50, which is in the middle of the neutral range and reflects consolidation. Medium term momentum has turned positive as the MACD histogram is printing in the black with a slightly upward sloping trajectory which points to consolidation.

Production is Unchanged

The EIA reports that supply remains flat. The average total supply of natural gas remained the same as in the previous report week, averaging 93.6 Bcf per day. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 4% from last week.