Natural Gas Price Prediction – Prices Surge on Inventory Build

Natural gas prices rallied sharply rising more than 3% following a smaller than expected build in natural gas inventories. Expectations had been for an 83 Bcf build in stockpiles according to survey provider Estimize. The weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. Tropical storm Sam has formed in the Atlantic but its unlikely to impact any natural gas infrastructure.

Technical Analysis

Natural gas prices surged rising 3.3% and poised to test resistance is seen near the 10-day moving average at 5.09. Support is seen near the 50-day moving average at 4.30. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Inventories Rise Less than Expected

Natural gas in storage was 3,082 Bcf as of Friday, September 17, 2021, according to the EIA. This represents a net increase of 76 Bcf from the previous week. Stocks were 589 Bcf less than last year at this time and 229 Bcf below the five-year average of 3,311 Bcf. At 3,082 Bcf, total working gas is within the five-year historical range.