Natural Gas Price Prediction – Prices Drop Despite Lower than Expected Inventory Build

Natural gas prices moved lower on Thursday moving down 1.15% despite a smaller than expected build in natural gas inventories. The weather is expected to remain moderate, which is reducing cooling demand. There is little warm weather in the north east or mid-west to increase the normal cooling demand.

Technical Analysis

Natural gas prices moved lower on Thursday, following the EIA’s inventory report. Prices eased through the 10-day moving average at 2.68, but was able to hold just above support near an upward sloping trend line that comes in near 2.66. Medium term momentum has flipped and turned negative. This occurs 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 negative momentum. The fast stochastic generated a crossover sell signal which points to accelerating negative momentum.

Inventories Climb Less than Expected

The EIA reported on Thursday that working gas in storage was 1,155 Bcf as of Friday, April 5, 2019. This represents a net increase of 25 Bcf from the previous week. Expectations were for inventories to rise by 35 Bcf. Stocks were 183 Bcf less than last year at this time and 485 Bcf below the five-year average of 1,640 Bcf. At 1,155 Bcf, total working gas is within the five-year historical range.

Reclassifications from working gas to base gas resulted in decreased working gas stocks of 1 Bcf in the Pacific region and 2 Bcf in the South Central Salt region for the week ending April 5, 2019. The implied flow for the week is an increase of 29 Bcf to working gas stocks.