Natural Gas Price Analysis for April 13, 2018

Natural gas prices edged higher by 0.5% on Thursday following a larger than expected draw in natural gas inventories as reported by the Energy Information Administration. Colder than normal weather is forecast to cover most of the northern section of the United States for the next 8-14 days, which should buoy heating demand.

Natural gas prices increase on Thursday but were unable to recapture resistance near the 50-day moving average at 2.69. Support is seen near an upward sloping trend line that comes in near 2.58.  Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation.

Inventories Declined More than Expected

Working gas in storage was 1,335 Bcf as of Friday, April 6, 2018, according to EIA estimates. This represents a net decrease of 19 Bcf from the previous week. Expectations were for a 11 Bcf decline. Stocks were 725 Bcf less than last year at this time and 375 Bcf below the five-year average of 1,710 Bcf. At 1,335 Bcf, total working gas is within the five-year historical range.

U.S. liquefied natural gas (LNG) exports increase week over week. Six vessels departed the Sabine Pass liquefaction facility from March 29 to April 4. One vessel, LNG-carrying capacity 3.8 Bcf,  was loading at the terminal on Wednesday.

Jobless Claims Dropped

The 9k U.S. initial claims drop to 233k in the first week of April partly reversed the 24k Good Friday pop to 242k from a lean 218k, leaving gyrations above the 45-year low of 217k at the end of February. The trend in claims remains tight despite the rise into April, as we saw in March before a later drop-back. The moving Easter holiday and school breaks often distort claims into early April, so the rise over the last two weeks isn’t problematic with this year’s slightly early holiday. Claims are entering April above lean 228k average in March, versus a super-lean 224k average in February, and prior averages of 232k in January and 240k in December. Next week’s April BLS survey week reading will compare to recent readings of 227k in March, 218k in February, and 226k in January, and 242k in December.