Natural Gas Price Prediction – Prices Rise Following Inventory Report

Natural gas prices attempted to move higher following a smaller than expected inventory build. The total number of active oil and gas rigs increased for the week by 12, with oil rigs rising by 10 and gas rigs rising by 2. Hurricane ETA has dissipated but a tropical depression has now formed in the Caribbean according to the National Oceanic Atmospheric Administration.  The weather is expected to be warmer than normal for the next two weeks according to the most recent forecast from NOAA.

Technical Analysis

Natural gas prices moved higher on Friday but settled nearly unchanged. Resistance is seen near the 10-day moving average at 3.0. Target support is seen near the July lows at 2.65.  The 10-day moving average has crossed below the 50-day moving average which means that a short-term downtrend is now in place. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the red but the trajectory is moving higher which points to consolidation.

Inventories Rise Less than Expected

Natural gas in storage was 3,927 Bcf as of Friday, November 6, 2020, according to the EIA. This represents a net increase of 8 Bcf from the previous week. Expectations were for a 14 Bcf build. Stocks were 196 Bcf higher than last year at this time and 176 Bcf above the five-year average of 3,751 Bcf. At 3,927 Bcf, total working gas is within the five-year historical range.