Natural Gas Price Prediction – Prices Ease Despite Robust Inventory Draw

Natural gas prices moved lower on Thursday following the Department of Energy’s inventory report, which declined more than expected. Expectations were for inventories to decline by 145 Bcf according to survey provider Estimize. The weather is expected to remain warmer than normal for the next 6-10 days according to NOAA, but then move to colder than normal in the west and warmer than normal in the east over the next 8-14 day period.

Technical Analysis

Natural gas prices moved lower on Thursday pushing through support near the January lows at 1.83The next level of target support is the 2016 lows at 1.61. Resistance to natural gas prices is seen near the 10-day moving average at 1.91. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading of 5, is below the oversold trigger level of 20 and could foreshadow a correction. Medium-term momentum has turned negative 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.

Natural Gas Storage Declines More than Expected

The EIA reported on Thursday that working gas in storage was 2,746 Bcf as of Friday, January 24, 2020, according to EIA estimates. This represents a net decrease of 201 Bcf from the previous week. Stocks were 524 Bcf higher than last year at this time and 193 Bcf above the five-year average of 2,553 Bcf. At 2,746 Bcf, total working gas is within the five-year historical range.