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David Becker

 

Natural gas prices moved lower on Thursday despite a smaller than expected build in natural gas inventories. After two robust days where prices rallied, natural gas has given back most of its gains. The weather is expected to be warmer than normal over the next 2-weeks, but during the shoulder months, there is little impact on natural gas demand.

Technical Analysis

Natural gas prices moved lower on Thursday following the EIA inventory report. Prices dropped 3.3%, and slipped back through support near the 10-day moving average at 1.74 which is seen as short term resistance. Target support on natural gas is seen near the May lows at 1.60. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory which points to consolidation.

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Inventories Rise Less than Expected

The Energy Information Administration reported that natural gas in storage was 2,503 Bcf as of Friday, May 15, 2020. This represents a net increase of 81 Bcf from the previous week. This compares to expectations that natural gas stockpiles would rise by 98 Bcf. Stocks were 779 Bcf higher than last year at this time and 407 Bcf above the five-year average of 2,096 Bcf. At 2,503 Bcf, total working gas is within the five-year historical range.

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