Natural Gas Price Prediction – Prices Recapture Resistance; But Trend Remains Downward Sloping

Prices rally ahead of inventory report
David Becker

Natural gas prices surge on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 114 Bcf draw according to survey provider Estimize. This follows a 137 bcf draw last week. The weather is expected to remain normal to warmer than normal throughout the mid-west and the east coast for the next 6-10 and 8-14 days according to forecast from the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices rallied on Wednesday ahead of Thursday’s inventory report. Prices surged 3.4%, slicing through resistance which is now seen as support near the 10-day moving average at 1.83. Resistance is seen near the February highs at 1.90.

Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy 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 is printing in the black with an upward sloping trajectory which points to higher prices.


The EIA Expects Higher Inventory

The EIA estimates that U.S. working natural gas inventories ended January at more than 2.6 trillion cubic feet which was 9% higher than the five-year average. EIA forecasts that total working inventories will end March at almost 2.0 Tcf, 14% higher than the five-year average. In the forecast, inventories rise by a total of 2.1 Tcf during the April through October injection season to reach almost 4.1 Tcf on October 31, which would be the highest end-of-October inventory level on record.

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