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Natural Gas Price Prediction – Price Rally 3% Ahead of Inventory Report

David Becker
Updated

Natural gas prices surged nearly 3% on Wednesday ahead of Thursday inventory report from the Department of Energy. Inventory levels are below the 5-year average range and the colder than normal weather is putting upward pressure on prices. Inventories are expected to draw by 85 Bcf according to Estimize.  There is currently no tropical activity in the Atlantic or the Caribbean according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices surged higher rising by 3%. Prices are fast approaching resistance near a downward sloping trend line that comes in near 3.37. Support is seen near the 10-day moving average at 3.23. Momentum on natural gas prices 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). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic surged higher reflecting accelerating positive momentum. The only caveat is that the fast stochastic is printing a reading of 92, above the overbought trigger level of 80 which could foreshadow a correction.

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Temperatures This Winter are Expected to be Normal

The EIA reported that temperatures for the winter of 2018–19, based on the most recent forecast of heating degree days from the National Oceanic and Atmospheric Administration, are expected to be roughly similar to last winter for most of the country. On a national-average basis, temperatures last winter were generally close to the 10-winter average. Although NOAA’s forecast for this winter indicates temperatures could be close to levels from both last winter and the typical winter from the past 10 years, recent winters provide a reminder that weather can be unpredictable.

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This article was originally posted on FX Empire

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