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David Becker

Natural gas prices moved lower on Thursday, declining slightly more than 2% following a smaller than expected draw in natural gas inventories. The weather is expected to be warmer than normal in the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration.  Oil prices rebounded on  Thursday as oil executives in the US appear to be having conversations with Saudi Arabia on a potential global cut in oil output.


Technical Analysis


Natural gas prices moved lower on Thursday declining 2% and testing support near the continuation contract low of 1.51. Resistance on natural gas prices is seen near the 10-day moving average at 1.66. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 8, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.


Inventories Decline Less than Expected

The Energy Information Administration reported that working gas in storage was 1,986 Bcf as of Friday, March 27, 2020. This represents a net decrease of 19 Bcf from the previous week. Expectations were for a 24 Bcf draw according to survey provider Estimize. Stocks were 863 Bcf higher than last year at this time and 292 Bcf above the five-year average of 1,694 Bcf. At 1,986 Bcf, total working gas is within the five-year historical range.

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