Natural Gas Price Prediction – Prices Surge Ahead of Inventory Report
Natural gas prices surged higher on Wednesday, rising more than 5% ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 88 Bcf build in stockpiles, according to survey provider Estimize. The weather is expected to be colder than normal throughout the mid-West over the next 6-10 days but then turning milder throughout most of the West Coast. There are no significant tropical disturbances in the Atlantic that are treating to become a tropical cyclone over the next 48-hours. Consumption is beginning to rise.
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Technical Analysis
Natural gas prices surged higher, rising more than 5.5%, and are poised to test the October highs at 6.59. The rollover from the November contract to the December contract happens Wednesday, and the December contract is $0.06. Support is seen near the 10-day moving average at 5.66. Short-term momentum is positive but prices are overbought. The fast stochastic is printing a reading of 92, above the overbought trigger level of 80. 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 (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).
Consumption is Rising
According to the EIA, U.S. natural gas consumption increases week over week, led primarily by an increase in the residential/commercial sector. Total U.S. natural gas demand rose by 1.9% compared with the previous report week. Natural gas consumed for power generation declined by 10.4%, as the country moves into the shoulder month. The drop in power generation was more than offset by week-over-week increases in other sectors.