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Natural Gas Prediction – Prices Rebound on Low Inventories

David Becker
Natural gas daily chart, October 30, 2018

Natural gas prices rebounded on Tuesday moving higher up to the 3.24 level recapturing resistance which is former support.  Prices could face upward pressure as the end of the injection season comes this week. Going forward, gas will be withdrawn from storage unless the weather becomes warmer than normal in the US.  Working gas stocks are at a deficit to the 5-year average, and well below the 5-year average range.

Technical Analysis

Natural gas prices moved higher on Tuesday pushing back above resistance near the 20-day moving average at 3.22.  Support is seen near the 50-day moving average at 3.03.  Momentum has turned positive as the fast stochastic generated a crossover buy signal. This points to accelerating positive momentum which points to higher prices.  The MACD (moving average convergence divergence) histogram is printing in the red with a flattening trajectory which points to consolidation.

Gas stocks are Low

Working gas stocks’ deficit to the five-year average increases, and the deficit to the bottom of the five-year range also increases. The average rate of net injections into storage is 14% lower than the five-year average so far in this refill season (April through October). If the rate of injections into storage matched the five-year average of 8 Bcf/day for the remainder of the refill season, total inventories will be 3,191 Bcf on October 31, which is 624 Bcf lower than the five-year average of 3,815 Bcf for that time of year. In the Lower 48 states, total working gas stocks are currently 323 Bcf lower than the five-year minimum, and every storage region is currently lower than the bottom of the five-year range. The deficit to the bottom of the range increased in the Midwest region and South Central region. As of this report week, the Midwest region is 74 Bcf (7%) lower than the five-year minimum, and the South Central region ncluding both salt and non-salt facilitie is 129 Bcf (13%) lower than the five-year minimum.

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