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Natural Gas Price Prediction – Prices Slip Despite Small than Expected Inventory Draw

By:
David Becker
Published: Sep 3, 2020, 18:39 UTC

Expectations were for a 47 Bcf build

Natural Gas Price Prediction – Prices Slip Despite Small than Expected Inventory Draw

Natural gas prices edged lower on Thursday, as the decline in riskier assets weighed on commodities. Inventories grew by less than expected according to the latest report from the Department of energy. The weather in the US is expected to be cooler than normal throughout the mid-west generating higher heating demand. There are two disturbances in the Atlantic that are headed toward the Caribbean that have a 20% chance of turning into a tropical cyclone according to NOAA.

Technical Analysis

Natural gas prices edged lower making a higher low and a lower high which is an inside day and a sign of indecision. Prices were unable to recapture resistance seen near the 20-day moving average at 2.50. Support is seen near the former breakout level at 2.35 and then the 50-day moving average at 2.17. 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 above the MACD signal line (the 9-day moving average of the MACD line).

Inventories Grew More than Expected

Naturla gas in storage was 3,455 Bcf as of Friday, August 28, 2020, according to the EIA. This represents a net increase of 35 Bcf from the previous week. This compared to expectations that stockpiles would rise by 47 Bcf. Stocks were 538 Bcf higher than last year at this time and 407 Bcf above the five-year average of 3,048 Bcf. At 3,455 Bcf, total working gas is above the five-year historical range.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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