Natural Gas Price Prediction – Inventories Grow in Line with Expectations

David Becker
nat gas

Natural gas prices whipsawed and moved down by slightly more than 2% on Thursday following the Department of Energy’s inventory report.  Jobs data was slightly weaker than expected which could mean the economic is slowing which could weigh on commodity prices. The weather is expected to be warmer than normal throughout the mid-west and east coast for the next 6-14 days which is also capping prices.

Technical Analysis

Natural gas prices continue to trade in a wide range.  Prices made a lower low and a lower high which is a sign of a downtrend.  Prices slipped through support which is now seen as resistance near 4.44. Support is seen near the weekly lows at 4.24. Momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

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Inventories Grew in Line with Expectations

The EIA reported that working gas in storage was 3,054 Bcf as of Friday, November 23, 2018. This represents a net decrease of 59 Bcf from the previous week. Expectations according to Estimize were for a 58 Bcf draw. Stocks were 644 Bcf less than last year at this time and 720 Bcf below the five-year average of 3,774 Bcf. At 3,054 Bcf, total working gas is below the five-year historical range.

ADP reported that the pace of job creation in November slipped amid a tight labor market. Private companies added 179,000 payrolls last month. This compared to forecast a gain of 195,000. Job gains were concentrated in medium-size businesses, with 50 to 499 employees, and came almost exclusively from services-providing companies. Professional and business services led with 59,000, while education and health services added 49,000 and leisure and hospitality was next with 26,000. Wall Street-related financial activities saw growth of 8,000, while information services lost 1,000 positions. On the goods side, construction added 10,000 and manufacturing saw growth of 4,000.

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