Inventories rise by 33 Bcf
Natural gas prices moved lower on Thursday after hitting a 3-month high earlier in the trading session. Prices generated an outside day which is generally a signal of a temporary top. This followed a slightly larger than expected rise in natural gas inventories according to the EIA. The weather in the US is expected to be warmer than normal for the next 6-10 and 8-14 days. There is no tropical cyclone activity expected in the Atlantic Ocean or the Gulf of Mexico over the next 48-hours according to NOAA.
Natural gas prices formed an outside day, making a higher high a lower low and a lower close which is generally a reversal signal. Prices have rallied 27% from their lows 4-days ago, which is one of the largest rallies seen in 2020 over such a short period. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 81, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with a positive slope which points to consolidation.
Natural gas in storage was 3,274 Bcf as of Friday, July 31, 2020, according to the EIA. This represents a net increase of 33 Bcf from the previous week. Expectations were for a 31 Bcf build according to survey provider Estimize. Stocks were 601 Bcf higher than last year at this time and 429 Bcf above the five-year average of 2,845 Bcf. At 3,274 Bcf, total working gas is within the five-year historical range.
David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.