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Natural gas prices rose nearly 5% Thursday, following the Department of Energy’s inventory report. Hurricane Laura was downgraded to a Category 1 storm after making landfall as a Category 4 hurricane, which landed near Lake Charles in Louisiana. Facilities in the Gulf of Mexico are manpowerless, having been shut down, reducing Gulf of Mexico production by 45%. The weather in the Midwest is expected to be cooler than normal, which should increase demand for heating.
Technical analysis
Natural gas prices rose after testing lower levels on Thursday. The target’s resistance is seen near the November 2018 highs at 2.90. Support is seen near the 10 day moving average at 2.44. Short term resistance turned positive as the Rapid Stochastic generated a cross buy signal. The current reading on the Fast Stochastic is 96 well above the overbought trigger level of 80 which could portend a correction.
Natural gas storage increased less than expected
Stored natural gas was 3420 Bcf as of Friday, August 21, 2020, according to the EIA. This represents a net increase of 45 Bcf from the previous week. Expectations were for a 50 Bcf build. Inventories were 580 Bcf higher than last year at this time and 438 Bcf higher than the five-year average of 2982 Bcf. At 3,420 Bcf, total working gas is above the historical five-year range.
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