Natural Gas Price Prediction – Prices Rise As Tropical Cyclone Two Forms

Natural gas prices edged higher on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 71 BCF build in natural gas inventories according to Estimize. This follows a 98 Bcf build last week. Tropical storm Two has formed in the Gulf of Mexico with sustained winds of 30 miles per hour. There is 100% chance that this storm will become a tropical cyclone according to the National Oceanic Atmospheric Administration. This storm is poised to hit the Natural Gas production area of Texas and Louisiana and will likely experience shut-ins throughout the Gulf of Mexico. In addition there is the chance that the Houston Ship Channel will close generating a dearth natural gas from the Gulf and putting upward pressure on Prices.

Technical Analysis

Natural gas prices moved higher on Wednesday but close off the highs of the session. Support is seen near the 10-day moving average at 2.34. Resistance is seen near the weekly highs at 2.44. Medium term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic also started to reaccelerate higher reflecting accelerating positive momentum. The current reading on the fast stochastic is 88, well above the overbought trigger level of 80 which could foreshadow a correction. The relative strength index moved higher with price action but the current reading of 55, is in the middle of the neutral range and reflects consolidation.