Natural Gas Edges Lower on Warm Weather Forecast

Natural gas prices slipped lower, sliding through trend line support. The move comes despite a larger than expected draw in natural gas inventories. The weather is expected to be warmer than normal throughout most of the United States for the next 2-weeks. According to the National Oceanic Atmospheric Administration, the weather is warmer than normal throughout the mid-West and West during this period.

 Technical Analysis

Natural gas prices declined 1%. Support is seen near the January lows at 3.78. Resistance is seen near the 50-day moving average at 4.09. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold. The fast stochastic is printing a reading of 9, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line.

Natural Gas Inventories Dropped

Natural gas in storage was 2,101 Bcf as of Friday, February 4, 2022, according to EIA estimates. This represents a net decrease of 222 Bcf from the previous week. Expectations were for a 211 decline according to Natural Gas Intelligence. Stocks were 441 Bcf less than last year at this time and 215 Bcf below the five-year average of 2,316 Bcf. At 2,101 Bcf, total working gas is within the five-year historical range.