Natural Gas Price Prediction – Prices Rise but fall 50% for the Year

Natural gas prices were under pressure for most of 2020. In 2020, prices fell slightly more than 50%. The spread of the coronavirus throughout the United States reduced heating and cooling demand in residential and commercial buildings, reducing need. Additionally, the lack of manufacturing reduced the overall demand for natural gas—inventories remain near the upper end of the 5-year average range. Prices rallied on Thursday following a larger than expected draw in natural gas stockpiles.

Technical Analysis

Natural gas prices moved higher on Thursday on the last trading day of the year. Support is seen near the December lows at 2.26. Resistance is seen near the 10-day moving average at 2.55. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. Medium term momentum is also positive as the MACD (moving average convergence divergence) generated a crossover buy signal.

Inventories Fall More than Expected

Natural gas in storage was 3,460 Bcf as of Friday, December 25, 2020, according to the EIA. This represents a net decrease of 114 Bcf from the previous week. Stocks were 251 Bcf higher than last year at this time and 206 Bcf above the five-year average of 3,254 Bcf. At 3,460 Bcf, total working gas is within the five-year historical range.