Natural Gas Price Prediction – Prices Rebound After Hitting Fresh Lows

Natural gas prices moved higher on Thursday despite a smaller than expected draw in natural gas inventories reported by the Department of Energy. Prices formed an inside day which is a lower high and a higher low. This follows Wednesday’s price action which same natural gas prices hit a fresh all-time low of 1.55. Drilling rigs are likely to halt production, as oil prices dipped into the low to mid-’20s. Warmer than expected weather is expected to cover the east coast for the next 6-10 and 8-14 days which is likely to weigh on prices.

Technical Analysis

Natural gas prices moved higher on Thursday following declines on Wednesday that took prices down to all-time lows. Resistance is seen near the 10-day moving average at 1.78. Support is seen near the all-time lows at 1.55. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. Medium-term momentum remains negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Decline Less than Expected

The Energy Information Administration reported that working gas in storage was 2,034 Bcf as of Friday, March 13, 2020. This represents a net decrease of 9 Bcf from the previous week. Expectations were for a 15 Bcf draw. Stocks were 878 Bcf higher than last year at this time and 281 Bcf above the five-year average of 1,753 Bcf. At 2,034 Bcf, total working gas is within the five-year historical range.