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David Becker

Natural gas prices rallied 3.5% on Thursday following a smaller than expected build in natural gas inventories. Strong than expected US jobs data helped lift natural gas. With several states scaling back their reopening up efforts, the demand for electricity is likely to remain subdued as few commercial buildings are likely to come back up during this period.

Technical Analysis

Natural gas prices rallied 3.5% but were unable to push through trend line resistance that comes in near 1.74. Support is seen near the 10-day moving average at 1.68. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. 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 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.

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Natural Gas Inventories Rise Less than Expected

Natural gas in storage was 3,077 Bcf as of Friday, June 26, 2020, according to the Energy Information Administration. This represents a net increase of 65 Bcf from the previous week. Expectations were for a 75 Bcf build according to survey provider Estimize. Stocks were 712 Bcf higher than last year at this time and 466 Bcf above the five-year average of 2,611 Bcf. At 3,077 Bcf, the total working gas is within the five-year historical range.

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