Natural gas Price Prediction – Prices Dip to Support Following in Line Inventory Report

Natural gas prices moved lower on Thursday, following an in line inventory report released by the Department of Energy.  Inventories remain well below the 5-year average range.  Hurricane activity does not appear to be threatening any land or rigs in the gulf, which has taken some of the wind out of natural gas. The weather is expected to be warmer than normal through out most of the United States for the next 8-14 days. This should help buoy cooling demand.

Technical analysis

Natural gas prices dipped 0.8% but seemed to hold just above support near an upward sloping trend line that comes in near 2.76.  A break of this level would lead to a test of the July lows at 2.70.  Resistance is seen near the 10-day moving average at 2.87. Momentum remains negative. The MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. The RSI (relative strength index) which is a momentum oscillator that measures accelerating and decelerating momentum, is breaking down reflecting accelerating negative momentum. The current reading on the RSI is 38, which is on the lower end of the neutral range but above the oversold trigger level of 30.

Inventories Growth was in Line with Expectations.

The Energy Information Administration reported that working gas in storage was 2,568 Bcf as of Friday, August 31, 2018. This represents a net increase of 63 Bcf from the previous week. Expectations were for an increase of 63 Bcf. Stocks were 643 Bcf less than last year at this time and 590 Bcf below the five-year average of 3,158 Bcf. At 2,568 Bcf, total working gas is below the five-year historical range. The trajectory of inventory growth remains below trend, approximately 2-months before the injection season begins.

The EIA made an announcement. “This report, for the week ending August 31, 2018, will be the last report EIA publishes using the current sample. As previously announced, on Monday, September 10, 2018, at 3:00 p.m., EIA will revise estimates for the eight weeks covering July 13, 2018, through August 31, 2018, to gradually phase in the estimates from the new sample”.