Natural Gas Price Prediction – Prices Drop but Rebound From Lows Following Weak Inventory Draw

Natural gas prices rebouned from session lows after hitting a fresh 1-month low at 2.67. Prices closed Thursday at 2.71, after the Department of Energy reported a smaller than expected draw in natural gas inventories. While inventories remain below the 5-year average, the recent warmer than normal weather has eased heading demand. The weather over the next 2-weeks is expected to be warmer than normal.

Technical Analysis

Natural gas prices moved lower but bounced from session lows tof finish down nearly 1%. Support is seen near session lows at 2.67 and then the February lows at 2.54. Resistance is seen near the 10-day moving average at 2.80. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating positive momentum. The fast stochastic is moving lower reflecting accelerating negative momentum. The current reading of 18.5 is below the oversold trigger level 20, which could foreshadow a correction.

Gas Storage Withdrawals Missed Expectations

Th EIA reported that working gas in storage was 1,107 Bcf as of Friday, March 22, 2019. This represents a net decrease of 36 Bcf from the previous week. Expectations wered for a 40 Bcf draw. Stocks were 285 Bcf less than last year at this time and 551 Bcf below the five-year average of 1,658 Bcf. At 1,107 Bcf, total working gas is within the five-year historical range. Prices remain well below the 5-year average price.