Natural Gas Price Prediction – Prices Drop Sharply Despite Inventory Draw

On Thursday, natural gas prices dropped sharply despite a larger than expected draw in natural gas inventories. Colder than average weather is expected to move down into the center of the United States over the next 2-weeks. The weather will remain warmer than normal on the East Coast.

Technical Analysis

On Thursday, natural gas prices dropped, declining 7%, following a 5% decline on Wednesday. Prices closed at a 6-month low. Target support is seen near April lows at 2.45. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 8, below the oversold trigger level of 20. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

 Inventories decline More than Expected

Natural gas in storage was 3,226 Bcf as of Friday, December 24, 2021, according to the EIA. This represents a net decrease of 136 Bcf from the previous week. Expectations were for a 87 Bcf draw in stockpiles according to survey provider Estimize. Stocks were 250 Bcf less than last year at this time and 19 Bcf above the five-year average of 3,207 Bcf. At 3,226 Bcf, total working gas is within the five-year historical range.