Natural Gas Price Prediction – Prices Cannot Gain Traction as Inventories Decline Less than Expected

Natural gas prices moved lower on Wednesday following a smaller than expected draw in natural gas inventories reported one-day early by the Department of Energy. Despite the robust level of short positions in the market, there is no imminent impetus that is expected to drive up the price over ahead of the holiday weekend. The weather is expected to be colder than normal only on the east coast of the US over the next 6-10 days and then the weather is expected to become milder during the 8-14 day forecast.

Technicals

Natural gas prices eased on Wednesday and were unable to recapture former support now resistance near an upward sloping trend line that comes in near 2.54. The December contract rolled into the January contract and prices were heavy. Additional resistance near the 10-day moving average near 2.63. Support is seen near the August lows at   2.48. Short term momentum has turned negative as the fast stochastic generated a crossover sell, and has accelerated lower. Prices are oversold as the fast stochastic is printing a reading of 3, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum negative as the MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Storage Declined Less than Expected

The Energy Information Administration reported that natural gas in storage was 3,610 Bcf as of Friday, November 22, 2019. This represents a net decrease of 28 Bcf from the previous week. Expectations were for natural gas stockpiles to decline by 50Bcf according to survey provider Estimize. Stocks were 548 Bcf higher than last year at this time and 31 Bcf below the five-year average of 3,641 Bcf. At 3,610 Bcf, total working gas is within the five-year historical range. The trajectory has put stockpiles at the 5-year average.