Natural Gas Price Prediction – Prices Slump Ahead of Inventory Report

Natural gas prices eased on Wednesday reversing Tuesday’s gains. This comes ahead of Thursday’s inventory report from the Department of Energy. Expectations are for stockpiles to climb by 93 Bcf according to Estimize. Prices have traded under pressure as inventory levels have made their way back to the middle of the 5-year range. With production continuing to rise, inventories will likely build unless LNG exports begin to reaccelerate.

Technical Analysis

Natural gas prices reversed Tuesday’s gains dropping 1.5%, closing below resistance near the 10-day moving average at 2.295. Support on natural gas is seen near the June lows at 2.16. Short term momentum has turned negative as the fast stochastic generate a crossover sell signal after recently generating a buy signal. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram is flat, hovering near the zero-index line which reflects consolidation.

Inventories Rose more than Expected Last Week

Inventories have been rising quickly. Last week the EIA reported that net injections into storage totaled 115 Bcf for the week ending June 14, compared with the five-year average net injections of 84 Bcf and last year’s net injections of 95 Bcf during the same week. Expectations had been for a 104 bcf rise. Working gas stocks totaled 2,203 Bcf, which is 199 Bcf lower than the five-year average and 209 Bcf more than last year at this time.

The average rate of net injections into storage is 39% higher than the five-year average so far in the refill season. If the rate of injections into storage matched the five-year average of 9.3 Bcf per day for the remainder of the refill season, total inventories would be 3,493 Bcf on October 31, which is 199 Bcf lower than the five-year average of 3,692 Bcf for that time of year.