Natural Gas Price Prediction – Prices Drop on Smaller than Expected Inventory Draw

Natural gas prices decline on Thursday falling 2%, as the dollar surged generating headwinds for commodities priced in US dollars. This followed a smaller than expected draw in natural gas inventories. The weather is expected to be warmer than normal on the east coast of the US for the next 2-weeks and much colder than normal throughout most of the west coast. Stocks were 796 Bcf higher than last year at this time, with most of the change in the east coast on the Midwest.

Technical Analysis

Natural gas prices moved lower on Thursday following a smaller than expected draw in natural gas stockpiles. Prices were able to hold above support near the 10-day moving average at 1.80. Resistance is seen near a downward sloping trend line that comes in near 1.90. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. This occurred in the middle of the neutral range which likely points to consolidation. Medium-term momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flat trajectory which points to consolidation.

EIA Reports Smaller than Expected Draw

The EAI reports that working gas in storage was 2,043 Bcf as of Friday, March 6, 2020. This represents a net decrease of 48 Bcf from the previous week. Expectations were for a 65 Bcf draw according to survey provider Estimize. Stocks were 796 Bcf higher than last year at this time and 227 Bcf above the five-year average of 1,816 Bcf. At 2,043 Bcf, the total working gas is within the five-year historical range.