Natural Gas Price Prediction – Prices Rally on Strong Inventory Report

Key Insights

• Natural gas continues in a positive uptrend.
• The weather is expected to be warmer than usual throughout the South.
• Natural gas inventories rose this week.

Natural gas prices sustained upward momentum on Thursday for the third trading session in a row. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal during the next 6-10 days and 8-14 days throughout most of the South. Temperatures have been cooler in the Northwest. Inventories rose in the latest week.

According to the EIA Natural Gas Storage Report that was released on Thursday, working gas storage rose by 76 Bcf from 1,567 Bcf to 1,643 Bcf. Expectations were for natural gas inventories to rise by 66 Bcf in the latest week.

Technical Analysis

On Thursday, natural gas prices tested the 10-day moving average near 7.766, extending gains for the third consecutive trading session. Target resistance is seen near the May highs at $8.99.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. However, momentum is decelerating. 

Medium-term momentum has turned negative. The MACD (moving average convergence divergence) generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.