Natural Gas Price Prediction – Prices Rebound Following Inventory Report

Natural gas prices made a lower low but closed up on the trading session following a smaller than expected build in natural gas inventories reported on Thursday by the Department of Energy. Natural gas prices were also buoyed by a tropical disturbance that is circling near the Bahamas and has a 70% chance of becoming a tropical storm. The weather is expected to remain warmer than normal for the next 2-weeks according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas dropped and rebounded to close the session in the black. Short-term support is seen near the 10-day moving average at 2.46. Resistance is seen near the September highs at 2.65. Short term momentum is positive to neutral. The current reading on the fast stochastic is 85, above the overbought trigger level of 80. Medium-term momentum is also positive to neutral as the MACD (moving average convergence divergence) histogram is printing in the black with a flat trajectory which points to consolidation.

Gas Inventories Climb Less than Expected

The EIA reported that natural gas in storage was 3,019 Bcf as of Friday, September 6, 2019. This represents a net increase of 78 Bcf from the previous week. Expectations were for a 85 Bcf build according to Estimize. Stocks were 393 Bcf higher than last year at this time and 77 Bcf below the five-year average of 3,096 Bcf. At 3,019 Bcf, total working gas is within the five-year historical range.

US natural gas production continued to increase in August, setting a new daily production record of 92.8 billion cubic feet per day Bcf per day on August 19, 2019, according to estimates from IHS Markit. Natural gas production also set a new monthly record in August, averaging more than 91 Bcf per day for the first time.