Natural Gas Price Prediction – Prices Tumble Following Larger than Expected Inventory Build

Natural gas prices broke down on Thursday following a larger than expected build in natural gas inventories. There is one storm in the Caribbean that has a zero percent chance of becoming a tropical cyclone during the next 48-hours according to NOAA. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to an NOAA forecast. This should continue to weigh on prices.

Technical Analysis

Natural gas prices broke down declining nearly 4% on Thursday following a larger than expected build in natural gas inventories. Prices are poised to test the March lows near 2.63. Resistance is seen near former support near 2.75. Prices are oversold. The RSI (relative strength index) is printing a reading of 28, below the oversold trigger level of 30, which could foreshadow a correction. The fast stochastic is printing a reading of 8, below the oversold trigger level of 20 which could foreshadow a correction. Momentum is negative as the MACD (moving average convergence divergence) historical is printing in the red with a downward trajectory which points to lower prices.

Inventories Rise more than Expected

Natural gas in storage was 3,958 Bcf as of Friday, November 13, 2020, according to the EIA. This represents a net increase of 31 Bcf from the previous week. Expectations were for a 14 Bcf build. Stocks were 293 Bcf higher than last year at this time and 231 Bcf above the five-year average of 3,727 Bcf. At 3,958 Bcf, total working gas is within the five-year historical range.