Natural Gas Consolidates Despite a Cold Weather Forecast

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Published: Apr 11, 2018, 19:10 UTC

Natural gas prices were higher on Wednesday but were unable to pierce through resistance levels near the 50-day moving average at 2.70. Prices have been

Natural gas prices were higher on Wednesday but were unable to pierce through resistance levels near the 50-day moving average at 2.70. Prices have been under pressure despite colder than normal weather which is expected to cover most of the mid-west and east coast, along with the northern west coast. Cold weather in April generally does not affect the inventory levels as we move into the injection season. Support is seen near the March lows at 2.64. Momentum is neutral as the MACD histogram prints near the zero-index level with a flat trajectory which reflects consolidation.

Net Flows Out of Store Were Less than Expected

Reported net flows of 20 Bcf out of storage are lower than most analysts’ expectations. According to the EIA, estimates of the weekly net change in working natural gas storage ranged from 21 Bcf to 41 Bcf, with a median of 26 Bcf.

Temperatures are relatively normal across the Lower 48 states during the storage week. Temperatures in the Lower 48 states averaged 46 degrees Fahrenheit (°F), 2°F lower than the normal and 6°F lower than last year at this time. The average temperature was slightly higher than during the prior storage week.

GDP is Slowing

Atlanta Fed’s Q1 GDPNow estimate was cut to 2.0% down from 2.3% previously: “The GDPNow model estimate for real GDP growth in the first quarter of 2018 is 2.0 percent on April 10, down from 2.3 percent on April 5. After the employment report from the U.S. Bureau of Labor Statistics on April 6, the nowcast of first-quarter real consumer spending growth fell from 1.3 percent to 1.1 percent and the nowcast of first-quarter real private fixed investment growth fell from 5.3 percent to 4.5 percent. The model’s estimate of the dynamic factor for March normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data declined from 1.43 to 0.25 after the employment report.”

About the Author

David Beckerauthor

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.