Natural Gas Price Prediction – Gas Slips Despite Low Inventories

Natural gas prices were lower mid-day on Monday, despite the forecast for warmer than normal temperatures expected to cover most of the United States over the next 8-14 days.  The increase in cooling demand during the beginning of the summer should reduce injections into storage. The 6 to 10-day forecast is even warmer in the mid-west and northeast which is a huge population center which will need cooling capabilities. Natural gas inventories are very close to the lower end of the 5-year range, and any outage, could send prices much higher.

Prices were able to hold just above support near an upward sloping trend line that comes in near 2.90. Resistance on natural gas is seen near the 10-day moving average at 2.95 and then the June highs at 3.05. Momentum is negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occur 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 RSI moved lower reflecting decelerating positive momentum and is printing a reading of 50, which is in the middle of the neutral range and reflects consolidation.

Inventories are Lower than Average

The EIA recently reported that gas inventories were 2,004 Bcf as of Friday, June 15, 2018. Stocks were 757 Bcf less than last year at this time and 499 Bcf below the five-year average of 2,503 Bcf. At 2,004 Bcf, total working gas is still within the five-year historical range.

U.S. Chicago Fed National Activity Index fell

U.S. Chicago Fed National Activity Index fell 0.52 ticks to -0.15 in May after rising 0.16 points to 0.42 in April which was revised from 0.34 from 0.26 in March which was revised from 0.32. But the 0.73 print from April was revised up to 0.75. The 3-month June moving average dropped to 0.18 from 0.48 in April versus 0.23 in March. According to the report, two of the four broad categories that comprise the index declined. Forty-six of the 85 individual indicators made negative contributions, while 39 made positive contributions.