Natural Gas Price Prediction – Prices Rally as Dorian’s Path Remains Uncertain

Natural gas prices surged more than 3% on Thursday as investors braced for the impact of Hurricane Dorian. The hurricane is closing in on Puerto Rico and is currently rated a category 1, storm with sustainable winds of 75-miles an hour. The storm is expected to increase in strength as it moves west north west, and could hit the east coast of Florida as a category 4, storm. The hurricane is expected to move over Florida and enter the Gulf of Mexico. Here the path is unknown. There are plenty of infrastructure issues that could occur if the storm moves west or even south. The best possible scenario for natural gas infrastructure is a move northward. The water in the Gulf is also warmer than the water in the Atlantic which could help the storm intensify. The EIA reported a larger than expected build in natural gas inventories, which did not affect prices.

Technical Analysis

Natural gas prices moved higher as Hurricane Dorian continues on a path toward the Caribbean Islands. Resistance is seen near the August highs 2.34. Support is seen near the 10-day moving average at 2.21. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic has been whipsawing frequently which is a sign of choppy trade. Medium-term momentum positive as the MACD (moving average convergence divergence) histogram printing in the black with a rising trajectory which points to higher prices.

The EIA Reports a Larger than Expected Build in Stockpiles

The EIA reported that working gas in storage was 2,857 Bcf as of Friday, August 23, 2019. This represents a net increase of 60 Bcf from the previous week. Expectations were for a 57 Bcf build. Stocks were 363 Bcf higher than last year at this time and 100 Bcf below the five-year average of 2,957 Bcf. At 2,857 Bcf, total working gas is within the five-year historical range.