Natural Gas Price Prediction – Prices Consolidate Following Inventory Report

David Becker
·1 min read

Natural gas prices moved lower on Thursday following a larger than expected build in natural gas inventories. Prices remain buoyed as the weather is expected to be much colder than normal throughout the mid-west for the next 6-10 days and then moderate over the next 8-14 days but still remain cooler than normal. There is a storm in the Caribbean that is entering the Gulf of Mexico that now has a 10% chance of becoming a tropical cyclone over the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices moved lower consolidating Wednesday gains. Prices eased less than one percent. Support is seen near the former breakout level at 2.95. Resistance is seen near the October high at 3.07. The RSI is running into resistance and will need to make a higher high with price action to avoid a divergence. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with rising trajectory which points to higher prices.

Inventories Rise more than Expected

Natural gas in storage was 3,926 Bcf as of Friday, October 16, 2020, according to the EIA. This represents a net increase of 49 Bcf from the previous week. Expectations were for a 39 Bcf build according to survey provider Estimize. Stocks were 345 Bcf higher than last year at this time and 327 Bcf above the five-year average of 3,599 Bcf. At 3,926 Bcf, total working gas is above the five-year historical range.

This article was originally posted on FX Empire