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David Becker

 

Natural gas prices whipsawed initially moving lower and then rising into the close of the session. Prices were buoyed following a smaller than expected build in natural gas inventories. Hurricane Zeta battered the New Orleans coast and has been downgraded to a post-tropical depression. There is another storm that is entering the Caribbean that has a 20% chance of becoming a tropical cyclone according to NOAA. The weather is expected to be warm and moderate over the next 2-weeks, reducing the need for heating demand.

Technical Analysis

Natural gas prices tested support near the 50-day moving average and rebounded to close nearly unchanged. Resistance on the December contract is seen near the October highs at 3.35. Prices are moving sideways and momentum is neutral. The fast stochastic is printing in the middle of the neutral range and the MACD histogram is moving sideways with a flat trajectory.

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Inventories Rise Less than Expected

Natural gas in storage was 3,955 Bcf as of Friday, October 23, 2020, according to the EIA. This represents a net increase of 29 Bcf from the previous week. Expectations were for a 46 Bcf build according to survey provider Estimize. Stocks were 285 Bcf higher than last year at this time and 289 Bcf above the five-year average of 3,666 Bcf. At 3,955 Bcf, total working gas is above the five-year historical range.v

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