Natural Gas Price Prediction – Prices Rebound Following Inventory Build

Natural gas prices moved higher on Thursday

Natural gas prices moved higher on Thursday following an inventory report that was broadly in line with expectations. The weather is expected to remain colder than normal on the east coast of the US for the next two weeks while becoming warmer than normal throughout most of the west coast. Job growth continues to be weaker than expected following this Thursday initial jobless claims report.

Technical Analysis

 

Natural gas prices rebounded 3.6% after dropping 4% on Wednesday, testing former support now resistance seen near the 10-day moving average at 1.92. Support is seen near an upward sloping trend line that comes in near 1.80. Short term momentum has turned positive generated a crossover buy signal after recently turning negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell 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 has crossed the zero-index level which is also a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Grew More than Expected

The EIA reported that natural gas in storage was 2,210 Bcf as of Friday, April 24, 2020. This represents a net increase of 70 Bcf from the previous week. Expectations were for a 68 Bcf build. Stocks were 783 Bcf higher than last year at this time and 360 Bcf above the five-year average of 1,850 Bcf. At 2,210 Bcf, total working gas is within the five-year historical range.