Natural Gas Price Prediction – Prices Rise Following Less than Expected Build in Stockpiles

Natural gas prices continued to break out to fresh contract highs on Thursday following the Energy’s Department inventory report. Warmer than normal weather is expected to cover most of the United States over the next 6-10 and 8-14 days. According to the National Oceanic Atmospheric Administration, there is one tropical storm in the Atlantic or Gulf of Mexico that has a 10% chance of becoming a tropical cyclone over the next 48-hours.

Technical Analysis

Natural gas prices continued to rally on Thursday following the EIA inventory report. The August contract closed at an all-time high for the 4th consecutive trading session. Target resistance is now the 2018 highs at 4.92. Support is seen near the former highs at 3.82 and then the 10-day moving average at 3.77. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought. The current reading on the RSI is 76 above the overbought trigger level of 70 which could foreshadow 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 crosses above the MACD signal line. The MACD histogram also generated a crossover buy signal.

Natural Gas Inventories Rose Less than Expected

Natural gas in storage was 2,678 Bcf as of Friday, July 16, 2021, according to the EIA. This represents a net increase of 49 Bcf from the previous week. Expectations were for a 55 Bcf build according to survey provider Estimize. Stocks were 532 Bcf less than last year at this time and 176 Bcf below the five-year average of 2,854 Bcf. At 2,678 Bcf, total working gas is within the five-year historical range.