Natural Gas Price Prediction – Prices Slump Following Inventory Build

Natural gas prices continue to decline on Thursday dropping 1.2% and closing on the lows of the trading session. This comes following a larger than expected build in natural gas inventories according to the US Department of Energy. There are three storms that have a small chance of beginning a tropical cyclone that are twirling in the Atlantic. The weather is expected to remain normal for the next 8-14 day, keeping natural gas heating demand subdued.

Technical Analysis

Natural gas prices dropped nearly 1.2% on Thursday in the wake of the Department of Energy’s inventory report. Prices continued to break down and pushed through an upward sloping trend line that comes in near 2.21, which is short term resistance. Additional, resistance is seen near the 10-day moving average near 2.30. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The only caveat is that the current reading on the fast stochastic is 6, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Natural Gas Inventories Rise More than Expected

The Energy Information Administration reported on Thursday that gas in storage was 3,415 Bcf as of Friday, October 4, 2019. This represents a net increase of 98 Bcf from the previous week. Expectations were for inventories to rise by 95 Bcf. Stocks were 472 Bcf higher than last year at this time and 9 Bcf below the five-year average of 3,424 Bcf. At 3,415 Bcf, total working gas is within the five-year historical range.