Natural Gas Price Forecast - Prices Rise on Report of Strong Inventory

Thursday marked the third consecutive trading session in which natural gas prices maintained their upward pace. The National Oceanic and Atmospheric Administration predicts that the weather will be warmer than average in the South for the next 6-10 days and 8-14 days. Northwest temperatures have been declining. Inventories increased over the past week.

Thursday's EIA Natural Gas Storage Report indicated that operational gas storage increased by 76 Bcf, from 1,567 Bcf to 1,643 Bcf. In the most recent week, natural gas inventories were anticipated to increase by 66 Bcf.

Technical Evaluation

Natural gas prices challenged the 10-day moving average near 7.766 on Thursday, continuing increases for the third consecutive session. Resistance is anticipated near the May highs, at $8.99.

As the fast stochastic generated a crossing buy signal, near-term momentum has turned positive. Nonetheless, momentum is diminishing.

Negative momentum has developed in the medium term. The MACD (moving average convergence divergence) signaled a sell crossover. This occurs when the MACD line (12-day moving average minus 26-day moving average) crosses beneath the MACD signal line (the 9-day moving average of the MACD line).

The MACD histogram is in negative territory and sloping downward, indicating that prices will decline.