Natural Gas Edges Lower Forming Bear Flag Pattern

Natural gas prices edged lower on Monday following last week’s 7% decline. According to a recent National Oceanic Atmospheric Administration report, colder than normal weather is expected to cover most of the Mid-West and North East, and warmer than average weather will cover most of the West Coast for the next 6-10 days. The weather is then expected to moderate over the 8-14 day period. U.S. natural gas supply was an unchanged week over week. U.S. Natural gas inventories ended December 3% more than the 5-year average for that time of year.

Technical Analysis

On Monday, natural gas prices declined after finishing the prior week in the red. Prices seem to be forming a bear flag pattern. Resistant is seen near the 200-day moving average at 4.08. Support is seen near the December lows at 3.53. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is positive but decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

Inventories Finish December Above 5-year Average

U.S. natural gas inventories ended December 2021 at 3.2 trillion cubic feet  3% more than the 2016–20 average. The EIA forecast inventories will end March 2022 at 1.8 Tcf, which would be 8% more than the 2017–21 average for the end of March.