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Natural Gas Price Prediction – Prices Drop on Inventory Build

David Becker

Natural gas prices whipsawed rising more than 4.5% on the open, but traders sold at resistance and the downward trajectory accelerated after a larger than expected build in natural gas inventories was reported by the Energy Information Administration. There are no disturbances in the Atlantic that are expected to become tropical cyclones over the next 48-hours. Additionally, the weather is expected to be colder than normal over the next 8-14 days.

Technical Analysis

Natural gas prices whipsawed jerking higher in the early AM only to see prices reverse following the latest inventory report from the Department of Energy. Resistance is seen near the 50-day moving average at 2.34.  Support is seen near the 10-day moving average at 2.21. Short term momentum is positive as the fast stochastic recently generated a crossover buy signal. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the red with a flat trajectory which points to consolidation.

Natural Gas Inventories Increased by More than Expected

The Department of Energy reported that working gas in storage was 2,634 Bcf as of Friday, July 26, 2019, according to EIA estimates. This represents a net increase of 65 Bcf from the previous week. This compares to expectations that natural gas stockpiles would grow by 41 Bcf, according to Estimize. Stocks were 334 Bcf higher than last year at this time and 123 Bcf below the five-year average of 2,757 Bcf. At 2,634 Bcf, total working gas is within the five-year historical range.

This article was originally posted on FX Empire