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David Becker

Natural gas prices rallied on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for a 14 Bcf build in natural gas stockpiles according to survey provider Estimize. There are two storms active near the Gulf of Mexico. Hurricane ETA is moving near the west coast of Florida. There is a second storm in the Caribbean that has a 30% chance of forming a tropical cyclone 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. Inventories during the injection season rose.

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Technical Analysis

Natural gas prices moved higher on Wednesday, closing near the session highs. Resistance is seen near the 10-day moving average at 3.06. 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. Prices have bounced from nearly oversold as the RSI (relative strength index) is printing a reading of 43, which reflects accelerating positive momentum. 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.

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Inventories During the Injection Season Rise by 5%

Total U.S. working natural gas in storage ended October at almost 4.0 trillion cubic feet 5% more than the five-year average and the second-highest end-of-October level on record according to the EIA. However, because EIA forecasts less U.S. natural gas production this winter than last winter, EIA forecasts that inventory draws will outpace the five-year average during the heating season (which would be 16% lower than the 2016–20 average.

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