David Becker
Add to Bookmarks

Natural gas prices moved lower on Friday, dropping more than3% for the day and down 11% for the week. A larger than expected build in natural gas inventories, in conjunction with warmer than normal weather, has led prices lower. The weather over the next 8-14 days is expected to be warmer than normal according to the most recent report from the National Oceanic Atmospheric Administration.

Know where Natural Gas is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Technical Analysis

Natural gas prices tumbled more than 11% this week, keeping pace with the drop in the equity markets. A decline in LNG exports is reducing demand in conjunction with warmer than normal weather. Target support is the 2016 lows at 1.61. A break of this level would be a fresh low on natural gas prices. Resistance is seen near the 10-week moving average at 1.95.

Weekly momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices. The fast stochastic generated a crossover sell signal in oversold territory. The current reading on the fast stochastic is 4.4, well below the oversold trigger level of 20 which could foreshadow a correction.

Th EIA reported that net withdrawal from storage totaled 143 Bcf for the week ending February 21, compared with the five-year average net withdrawal of 122 Bcf and last year’s net withdrawal of 167 Bcf during the same week. Working natural gas stocks totaled 2,200 Bcf, which is 179 Bcf more than the five-year average and 637 Bcf more than last year at this time. The average rate of withdrawal from storage is 9% lower than the five-year average so far in the withdrawal season. If the rate of withdrawal from storage matched the five-year average of 8.3 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,876 Bcf on March 31, which is 179 Bcf higher than the five-year average of 1,697 Bcf for that time of year.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker