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Natural Gas Price Prediction – Prices Rise Following Inline Draw in Inventories

Prices are forming a bear flag pattern
David Becker

Natural gas prices moved higher on Thursday rising nearly 2%, but settled off the highs of the session. The rise comes as inventory levels grew in line with expectations according to the most recent forecast from the energy information administration. The weather is expected to be warmer than normal for the next 6-10 and 8-14 days according to the last forecast from NOAA. In its Short-Term Energy Outlook, the U.S. Energy Information Administration forecasts that U.S. natural gas exports will exceed natural gas imports by an average of 7.3 billion cubic feet per day

Natural gas prices rose on Thursday making a higher high and a lower low, but closing off the highs of the trading session. Support on natural gas is seen near the January lows at 1.83. Resistance is seen near the 10-day moving average at 2.07. Short term momentum is positive as the fast stochastic generated a crossover buy signal in oversold territory. Medium-term momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Grew in Line with Expectations

The EIA reported that working gas in storage was 2,947 Bcf as of Friday, January 17, 2020. This represents a net decrease of 92 Bcf from the previous week. Expectations were for a 92 Bcf draw. Stocks were 554 Bcf higher than last year at this time and 251 Bcf above the five-year average of 2,696 Bcf. At 2,947 Bcf, total working gas is within the five-year historical range.

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