Natural Gas Price Prediction – Gas is Poised to Test Higher Levels

Natural gas prices moved higher as warmer than normal weather continues to cover most of the western portion of the United States.  The temperatures in southern California, have soared, increasing the demand for power that is generated from natural gas.  Cooling demand is also increasing throughout the east coast, along with robust manufacturing demand.

Prices remain buoyed, after touching the 2.8 handle last week. Support is seen near the 10-day moving average at 2.76. Resistance is seen near the June highs at 2.94. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occur as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Storage Levels are Slipping

Working gas stocks are on pace to end the refill season lower than the five-year range. Net injections into storage are 19% lower than the five-year average rate so far in the 2018 refill season. If working gas stocks match the five-year average rate of injections of 9.6 Bcf per day for the remainder of the refill season, inventories will total 3,258 Bcf on October 31, almost 300 Bcf lower than the five-year low of 3,560 Bcf. In the Lower 48 states, total working gas stocks are currently 29 Bcf higher than the bottom of the five-year range, but 12 Bcf and 46 Bcf lower than the five-year range in the East and Midwest regions, respectively. The South Central region posted working gas stocks that are 90 Bcf higher than the bottom of the five-year range.

Net injections fall lower than the five-year average for the fourth week in a row. Net injections into storage totaled 24 Bcf for the week ending July 20, compared with the five-year average net injections of 46 Bcf and last year’s net injections of 19 Bcf during the same week. Working gas stocks totaled 2,273 Bcf and are now 557 Bcf lower than the five-year average and 705 Bcf lower than last year at this time.