Natural Gas Price Prediction – Prices Rally on Cold Weather Forecast

Natural gas prices rose 1.75% following a smaller than expected build in natural gas inventories. Colder than normal weather is forecast to cover most of the United State sending frigid weather into the upper mid-west. This should increase heating demand ahead of the beginning of the withdrawal season. Higher production is capping upward price mobility. There is a disturbance in the Gulf of Mexico which now has approximately a 60% chance of beginning a tropical cyclone according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices rebounded rising 1.75% following a smaller than expected build in natural gas inventories. Resistance is seen near the October highs at 2.38. Support is seen near the 10-day moving average at 2.29. Short term momentum has is whipsawing but has turned positive after a recent crossover buy signal. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Inventories Rise Less than Expected

The Energy Information Administration reported on Thursday that natural gas in storage was 3,606 Bcf as of Friday, October 18, 2019. This represents a net increase of 87 Bcf from the previous week. Expectations were for a 93 BCF rise according to survey provider Estimize. Stocks were 519 Bcf higher than last year at this time and 28 Bcf above the five-year average of 3,578 Bcf. At 3,606 Bcf, total working gas is within the five-year historical range. Natural gas storage injections in the United States have outpaced the previous five-year average so far during the 2019 injection season as a result of rising natural gas production.