Natural Gas Price Prediction – Prices Rally Following Inventory Report

Natural gas prices rallied on Thursday following the Department of Energy’s report on inventories. According to NOAA, the weather is expected to be warmer than normal throughout most of the United States over the next 6-10 and 8-14 days. The trajectory of inventories is rising but remain within the 5-year average range and below the 5-year average for this time of year.

Technical Analysis

Natural gas prices moved higher on Thursday following the EIA inventory report. Prices moved back above resistance which is a downward sloping trend line seen near 2.99. Target resistance is seen near the February highs at 3.06. Target support is seen near the 10-day moving average at 2.94 and then the 50-day moving average at 2.74. Short-term momentum has flip-flopped and turned positive as the fast stochastic 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 9-day moving average of the MACD line).

Inventories Rose in Line with Expectations

Natural gas in storage was 2,029 Bcf as of Friday, May 7, 2021, according to the EIA. This represents a net increase of 71 Bcf from the previous week. Expectations were for a 71 Bcf build according to survey provider Estimize. Stocks were 378 Bcf less than last year at this time and 72 Bcf below the five-year average of 2,101 Bcf. At 2,029 Bcf, total working gas is within the five-year historical range.