Natural Gas Price Prediction – Prices Rebound Ahead of Committment of Traders Report

Cold weather continues to buoy prices
David Becker
Gas industry

Natural gas prices moved sideways on Friday, rising slightly and forming an inside day. The move comes despite a smaller than expected build in natural gas stockpiles reported by the Department of Energy on Thursday. The amount of natural gas held in storage in 2019 went from a relatively low value of 1,155 billion cubic feet at the beginning of April to 3,724 Bcf at the end of October because of near-record injection. The weather is expected to remain colder than normal over the next 6-10 days but the weather is expected to become milder during the 8-14 day period. The CFTC is likely to show that managed money that was short continued to cover positive in futures and options during the latest week.

Technical Analysis

Natural gas prices formed an inside day which is a higher low and a lower high. Support near the former breakout level of 2.73. Resistance is seen near the November highs at 2.91. After this level target resistance is seen near the May highs at 2.98. Short term momentum is turning negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 77, which is a decline from 85 on Wednesday which reflects accelerating negative momentum. Medium-term momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.

The EIA Reports Large Storage Builds in 2019

The EIA reported that the amount of natural gas held in storage in 2019 went from a relatively low value of 1,155 billion cubic feet at the beginning of April to 3,724 Bcf at the end of October because of near-record injection activity during the natural gas injection, or refill, season. Inventories as of October 31 were 37 Bcf higher than the previous five-year end-of-October average, according to interpolated values in the U.S. Energy Information Administration’s Weekly Natural Gas Storage Report.

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