Natural Gas Price Prediction – Prices Rise Ahead of Inventory Report

Natural gas prices moved higher on Wednesday ahead of Thursday inventory report. Expectations are for natural gas stockpiles to decline by 125 Bcf according to survey provider Estimize. Inventories declined by 143 bcf less than the 158 Bcf expected. The weather is expected to warmer than normal over the next 6-10 and 8-14 days, according to the latest forecast from the National Oceanic Atmospheric Administration. This should put downward pressure on natural gas demand, ahead of the spring when demand generally declines.

 

Technical Analysis

 

Natural gas prices rebounded on Wednesday running into resistance near the 10-day moving average at 1.818. Prices made a higher high and a higher low which is a positive sign. Prices remain in a downtrend. Support is seen near the February lows at 1.63. The next target is the 2016 lows at 1.61. After than level the market could fall in a whole and target a downtrend low channel that comes in near 1.23. This would be the target level within a 30-day period.

 

Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading of 38 shows an acceleration from the oversold trigger level of 20. The RSI (relative strength index) rebounded from oversold territory below 30 which reflects accelerating positive momentum. Medium-term momentum has 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).

Inventories are Higher than Last Year

The EIA is scheduled to report inventories for the last week of February. The net withdrawal from storage totaled last week at 143 Bcf for the week ending February 21, compared with the five-year average net withdrawal of 122 Bcf and last year’s net withdrawal of 167 Bcf during the same week. Working natural gas stocks totaled 2,200 Bcf, which is 179 Bcf more than the five-year average and 637 Bcf more than last year at this time.