Natural Gas Price Prediction – Prices Run into Resistance but Momentum Remains Positive

Natural gas prices rebounded sharply, rising to resistance, but failing to break out. The rally comes despite a larger than expected build in natural gas inventories. The weather is expected to be normal over the next 8-14 days which should reduce any cooling or heating demand. There is one disturbance in the Gulf of Mexico that NOAA gives a 0% chance of becoming a tropical storm over the next 48-hours.

Technical Analysis

Natural gas prices surged higher rising 1.5% following Thursday outside day is generally considered a reversal day. Prices ran into resistance near the 10-day moving average at 2.40. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic has now moved out of oversold territory which points to accelerating positive momentum. Medium-term negative momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a flattening trajectory which points to consolidation.

The EIA reported this week that injection totaled 112 Bcf for the week ending September 27, compared with the five-year average net injections of 83 Bcf and last year’s net injections of 91 Bcf during the same week. Working gas stocks totaled 3,317 Bcf, which is 18 Bcf lower than the five-year average and 465 Bcf more than last year at this time. This was larger than the 95 Bcf injection into storage expected.The average rate of net injections into storage is 28% higher than the five-year average so far in the refill season. If the rate of injections into storage matched the five-year average the remainder of the refill season, total inventories would be 3,674 Bcf on October 31, which is 18 Bcf lower than the five-year average of 3,692 Bcf for that time of year, according to the EIA.