Natural Gas Price Prediction – Prices Rebound Ahead of Inventory Numbers

Natural gas prices moved slightly higher on Thursday, forming an inside day. This followed the Energy Information Administration’s natural gas inventory report. The weather is expected to be mild and warmer than normal for the next 2-weeks which should reduce heating demand. Hurricane Delta continues to churn in the Gulf of Mexico which will knock out approximately 20% of US natural gas production. Another disturbance is moving off of Africa, with a zero percent chance of becoming a tropical cyclone in the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices made an inside day with a lower high and a higher low which is a sign of indecision. Prices recaptured resistance which is now support near the 10-day moving average at 2.60. Resistance is seen near the 50-day moving average at 2.73. The 10-day moving average recently crossed below the 50-day moving average which means that a medium-term downtrend is now in place. Medium-term momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the red with a rising trajectory which points to consolidation.

Inventories Rise in Line with Expectations

Natural gas in storage was 3,831 Bcf as of Friday, October 2, 2020, according to the EIA. This represents a net increase of 75 Bcf from the previous week. Expectations were for a 76 Bcf build according to surve provider Estimize. Stocks were 444 Bcf higher than last year at this time and 394 Bcf above the five-year average of 3,437 Bcf. At 3,831 Bcf, total working gas is above the five-year historical range.