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Natural Gas Price Prediction – Prices Rise Following Larger Than Forecast Inventory Draw

Prices rise for the second consecutive trading session
David Becker

Natural gas prices rebounded on Thursday following a larger than expected draw in natural gas inventories according to a report from the Department of Energy. The weather is expected to become colder than normal over the next 6-10 and 8-14 days in the western portion of the United States but remain mild in the eastern section of the US. With only 9-days left un Hurricane seasons, there are no disturbances that are expected to become tropical cyclones over the next 48-hours according to NOAA.

Technicals

Natural gas prices moved higher on Thursday rebounding for the second consecutive trading session. Prices are poised to test resistance near an upward sloping trend line that was former support which coincides with the 10-day moving average near 2.62. Support is seen near the November lows at 2.50. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in red with a flat trajectory that points to consolidation.

Gas Stock Decline More than Expected

The Energy Information Administration reported on Thursday that natural gas stockpiles in storage was 3,638 Bcf as of Friday, November 15, 2019. This represents a net decrease of 94 Bcf from the previous week. Expectations were for natural gas inventories to decline by 49 Bcf according to survey provider Estimize. Stocks were 506 Bcf higher than last year at this time and 60 Bcf below the five-year average of 3,698 Bcf. At 3,638 Bcf, total working gas is within the five-year historical range. The trajectory of the decline pushes the current levels of inventories back below the 5-year average for this time of year. The decline was based on very cold weather, but expectations are for the weather to remain mild, which should mitigate future draws in stockpiles.

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