Natural Gas Price Prediction – Prices Continue to Rally Ahead of Inventory Report

Natural gas prices moved higher on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 31 Bcf build in natural gas inventories according to survey provider Estimize. The dollar moved lower which is helping to buoy natural gas prices. Since natural gas is priced in dollars, a weaker dollar makes it less expensive to purchase outside the US helping to buoy the price. The weather is expected to be warmer than normal for the next 2-weeks according to NOAA. There is one disturbance in the Atlantic which has a 10% chance of becoming a tropical cyclone.

Technical Analysis

Natural gas prices rose 0.9% on Wednesday but finished well of the session highs. Support is seen near the 10-day moving average at 1.94. Resistance is seen near the May highs at 2.50. Short-term momentum is flat to positive as the fast stochastic is poised to generate a crossover sell signal. The current reading on the fast stochastic is 94, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Net Injections are Expected to Rise

The net injections into storage totaled 26 Bcf for the week ending July 24, which compares to this week’s estimate of 31 Bcf. This also compared with the five-year average net injections of 33 Bcf and last year’s net injections of 56 Bcf during the same week. Working natural gas stocks totaled 3,241 Bcf, which is 429 Bcf more than the five-year average and 626 Bcf more than last year at this time.