Natural Gas Price Prediction – Prices Rise as Laura is Downgraded but Generate Widespread Damage

Natural gas prices moved higher on Thursday rising near 5%, following the Energy Department Inventory report. Hurricane Laura has been downgraded to a category 1 storm after making landfall as a category 4 hurricane, which landed near Lake Charles Louisiana. Installations in the Gulf of Mexico are without manpower, having been halted which reduced the Gulf of Mexico production by 45%. The weather in the mid-west is expected to be cooler than normal which should increase heating demand.

Technical Analysis

Natural gas prices moved higher after testing lower levels on Thursday. Target resistance is seen near the November 2018 highs at 2.90. Support is seen near the 10-day moving average at 2.44. Short term resistance has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 96 well above the overbought trigger level of 80, which could foreshadow a correction.

Natural Gas Storage Rose Less than Expected

Natural gas in storage was 3,420 Bcf as of Friday, August 21, 2020, according to the EIA. This represents a net increase of 45 Bcf from the previous week. Expectations were for a 50 Bcf build. Stocks were 580 Bcf higher than last year at this time and 438 Bcf above the five-year average of 2,982 Bcf. At 3,420 Bcf, total working gas is above the five-year historical range.