Natural Gas Price Prediction – Prices Break Through Resistance Following Inventory Report

Natural gas prices continued to rally on Thursday following the inventory report released by the Department of Energy. Prices pushed toward resistance and broke out. The weather remains stuck in a pattern where there is warmer than normal weather in the west and east coasts and cooler than normal weather in the south. There are two storms in the Atlantic. One is closer to the Gulf of Mexico and one is near Africa. According to the National Oceanic Atmospheric Administration, they have a 10% change and 20% chance of turning into a tropical cyclone in the next 48-hours.

Technical Analysis

Natural gas prices pushed toward resistance and closed near fresh highs. Support is seen near the 10-day moving average near 3.27. A close above 3.31, would lead to a test of the 2019 highs which is seen near 3.48. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 98, well above the overbought trigger level of 80 which foreshadows a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Inventories Rise Less than Expected

Natural gas in storage was 2,482 Bcf as of Friday, June 18, 2021, according to the EIA. This increase represents a net rise of 55 Bcf from the previous week. Expectations were for a 73 Bcf increase in stockpiles. Inventories were 513 Bcf less than last year at this time and 154 Bcf below the five-year average of 2,636 Bcf. At 2,482 Bcf, total working gas is within the five-year historical range.