Natural Gas Price Prediction – Prices Rally Following Inventory Report

Natural gas prices surged higher on Wednesday following an inventory report from the Department of Energy. Prices were also buoyed following a report that showed that the weather was expected to be cooler than normal for most of the south over the next 8-14 days. There is one storm in the Atlantic that has a 10% chance of turning into a tropical cyclone but it should not impact any natural gas installations.

Technical Analysis

Natural gas prices rebounded for a third consecutive trading session on Wednesday pushing through resistance near the 10-day moving average at 2.7 which is now seen as support. Resistance is seen near the 50-day moving average at 3.09. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. The RSI has also rebounded from an oversold territory which also reflects accelerating positive momentum. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line. The MACD histogram is printing in the-black with an upward sloping trajectory which points to higher prices.

Inventories Draw in Line with Expectations

Natural gas in storage was 3,940 Bcf as of Friday, November 20, 2020, according to the EIA. This represents a net decrease of 18 Bcf from the previous week. Expectations were for a 18 Bcf draw. Stocks were 322 Bcf higher than last year at this time and 250 Bcf above the five-year average of 3,690 Bcf. At 3,940 Bcf, total working gas is within the five-year historical range.