Natural Gas Price Predication – Prices Rise on Bullish Inventory Report

Natural gas prices rebounded on Thursday following the Energy Information Administrations inventory report. Stocks declined more than expected and are 33 Bcf higher than they where at the same time last year and approximately 10% lower in price. The 6-10-day forecast is forecast to be much colder than normal but the weather is moving west to east which could bring about a warmer pattern in the beginning of February. That being said the 8-14 day forecast points to cold weather.

Technical Analysis

Natural gas prices moved higher rising 4% on Thursday but remained within the prior days range forming an inside day which is a sign of indecision. Resistance is seen near the 10-day moving average at 3.25. Support is seen near an upward sloping trend line that comes in near 2.87. Negative momentum is accelerating. The MACD (moving average convergence divergence) index is poised to generate a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The fast stochastic on the other hand has moved from oversold territory to neutral territory and is poised to generate a crossover buy signal. This shows that short term momentum is accelerating and when combined with the MACD point to consolidation.

Natural Gas Inventories Decline More than Expected

The Energy Information Administration reported that working gas in storage was 2,370 Bcf as of Friday, January 18, 2019. This represents a net decrease of 163 Bcf from the previous week. Expectations were for inventories to decline by 147 Bcf. Stocks were 33 Bcf higher than last year at this time and 305 Bcf below the five-year average of 2,675 Bcf. At 2,370 Bcf, total working gas is within the five-year historical range. Inventories remain at the bottom end of the 5-year range and protracted cold weather will drive prices higher.