Natural Gas Price Prediction – Prices Whipsaw and Close Higher Despite Inventory Build

Natural gas prices whipsawed initially moving lower, but rallied into the close, settling near the highs of the trading session. This followed a larger than expected build in natural gas inventories. On Friday Baker Hughes will release the latest drilling rig report. While there are expected to be double-digit declines in oil inventories, natural gas rigs are expected to ease by only 1. Prices bounced just above the prior April lows, generating additional volatility. The weather is expected to be normal to slightly above normal over most of the United States.

Technical Analysis

Natural gas prices rebounded sharply off support levels, rebounding ahead of support near the April lows at 1,52. Prices were able to reach the 10-day moving average seen near 1.69. Target resistance is seen near the April highs just above 1.90. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is neutral as the MACD histogram prints near the zero index level with a flat trajectory that reflects consolidation.

Natural gas in storage was 2,097 Bcf as of Friday, April 10, 2020, according to the EIA. This represents a net increase of 73 Bcf from the previous week. Expectations were for a 66 Bcf build. Stocks were 876 Bcf higher than last year at this time and 370 Bcf above the five-year average of 1,727 Bcf. At 2,097 Bcf, total working gas is within the five-year historical range.