Natural Gas Price Prediction – Prices Tumble Following Inventory Draw Miss
Natural gas prices tumbled on Thursday following a smaller than expected draw in natural gas inventories. Prices dropped more than 10% at the lows. The weather is expected to be normal over the next 2-weeks, and there are currently no disturbances that are expected to turn into a tropical cyclone over the next 2-weeks.
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Technical analysis
Natural gas Prices tumbled on Thursday dropping nearly 10%, following a smaller than expected draw in inventories. Support is seen near the March low at 2.42. Resistance is seen near the breakdown level which is an upward sloping trend line that comes in near 2.68. Momentum is negative 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 below the MACD signal line). Prices are oversold. The RSI is printing a reading of 28, below the oversold trigger level of 30 which could foreshadow a correction.
Inventories Declined Less than Expected
Natural gas in storage was 3,939 Bcf as of Friday, November 27, 2020, according to the EIA. This represents a net decrease of 1 Bcf from the previous week. Expectations were for a 23 Bcf draw according to survey provider Estimize. Stocks were 343 Bcf higher than last year at this time and 290 Bcf above the five-year average of 3,649 Bcf. At 3,939 Bcf, total working gas is within the five-year historical range.