Advertisement
Advertisement

Natural Gas Price Prediction – Price Slip on Inventory Release

By:
David Becker
Published: Dec 13, 2018, 20:48 UTC

Natural gas prices edged lower on Thursday following a draw in natural gas inventories that was in line with expectations. The weather over the next 8-14

Natural gas daily chart, December 14, 2018

Natural gas prices edged lower on Thursday following a draw in natural gas inventories that was in line with expectations. The weather over the next 8-14 days is expected to be warmer than normal which should weigh on natural gas prices as heating demand slips.

Technical Analysis

Natural Gas prices moved lower on Thursday, making a lower low and a lower high which is a sign of a downtrend. Resistance is seen near the 10-day moving average at 4.39. Support is seen near 3.99. Momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. Prices are oversold. The fast stochastic is printing a reading of 16, well below the oversold trigger level of 20, which could foreshadow a correction.

Inventories Decline in Line with Expectations

The EIA reported that working gas in storage was 2,914 Bcf as of Friday, December 7, 2018. This represents a net decrease of 77 Bcf from the previous week. Expectations were for inventories to declin by 78 Bcf according to Estimize. Stocks were 722 Bcf less than last year at this time and 723 Bcf below the five-year average of 3,637 Bcf. At 2,914 Bcf, total working gas is below the five-year historical range.

EIA estimates that U.S. natural gas storage inventories were 3.0 trillion cubic feet (at the end of November, which was 19% lower than the five-year average for the end of November. EIA forecasts that dry natural gas production will average 83.3 billion cubic feet per day in 2018, up 8.5 Bcf per day from 2017. Both the level and volume growth of natural gas production in 2018 would establish new records. EIA expects natural gas production will continue to rise in 2019 to an average of 90.0 Bcf per day.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement