Natural Gas Price Prediction – Prices Rally on Smaller than Expected Inventory Build

Natural gas prices surged higher on Thursday following a smaller than expected draw in natural gas inventories reported by the Department of Energy. Over the next 48-hours there are no expectations for tropical cyclones in the Atlantic or Gulf of Mexico according to the National Oceanic Atmospheric Administration (NOAA). The weather is expected to remain warmer than normal for the next 6-10 and 8-14 days according to the latest report from NOAA which should increase cooling demand.

Technical Analysis

Natural gas prices surged nearly 5% on Thursday following the EIA inventory report. Prices closed through trend line resistance near 2.22, and are poised to test target resistance near the August highs at 2.33. Medium term momentum has 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 9-day moving average of the MACD line. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. Short term momentum is also positive as the fast stochastic accelerated higher.

Natural Gas Stockpiles Rise Less than Expected

The Energy Information Administration reported that natural gas in storage was 2,738 Bcf as of Friday, August 9, 2019. This represents a net increase of 49 Bcf from the previous week. Expectations were for a 55 bcf increase in inventories according to Estimize. Stocks were 357 Bcf higher than last year at this time and 111 Bcf below the five-year average of 2,849 Bcf. At 2,738 Bcf, total working gas is within the five-year historical range.