Advertisement
Advertisement

Natural Gas Prices Slip Following In-Line Inventory Reports

By:
David Becker
Updated: Feb 1, 2019, 12:23 UTC

Natural gas slips through support despite cold weather forecast

Natural gas daily chart, January 31, 2019

Natural gas prices moved lower on Thursday despite an inline decline in inventories reported by the Department of Energy. The weather across the mid-west remains frigid and is expected to turn milder beginning Friday.  The weather for the next 6-10 and 8-14 days is expected to be colder than normal through out the west and mid-west.

Technical Analysis

Natural gas prices slipped lower on Thursday sliding through support seen near 2.87 and closing at the lowest levels seen since September of 2018. Target support is now seen near the September lows near 2.75. Short term resistance is former support at 2.87. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Declined in Line with Expectations

The Energy Information Administration reported that working gas in storage was 2,197 Bcf as of Friday, January 25, 2019. This represents a net decrease of 173 Bcf from the previous week. Expectations where for a 176 Bcf decline according to Estimize. Stocks were 14 Bcf less than last year at this time and 328 Bcf below the five-year average of 2,525 Bcf. At 2,197 Bcf, total working gas is within the five-year historical range.

The weather was so cold through the mid-west of the United States that a number of states call for state-of-emergencies. Universities through the mid-west were asked to keep the thermometer near 65 degrees F, because it was so cold they were using up their natural gas reserves for the states. The weather is expected to moderate over the weekend but then turn cold again over the 6-14 day period.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement