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Natural Gas Price Prediction – Prices Eased on Weather Change

By:
David Becker
Published: Oct 22, 2018, 13:04 UTC

Natural gas prices eased Friday as traders took profit following an in line inventory report released earlier in the day by the Department of Energy.  The

Natural Gas

Natural gas prices eased Friday as traders took profit following an in line inventory report released earlier in the day by the Department of Energy.  The trajectory of injections remains subdued which will put the US at a year over year deficit when the withdrawal season begins on November 1. There are no tropical cyclones in the Atlantic or the Caribbean.  The weather is expected to be colder than normal for most of the mid-west and east coast for the next 2-weeks according to the latest forecast from NOAA.

Technical Analysis

Natural gas prices reversed course mid-day on Thursday following an inventory report from the Department of Energy. Prices dropped losing all of Wednesday’s gains, as prices failed near resistance levels at a downward sloping trend line that comes in near 3.37. Prices sliced through support which is now short-term resistance near the 10-day moving average at 3.23. Momentum is neutral as the MACD (moving average convergence divergence) prints near the zero index level with a flat trajectory which  points to consolidation. The relative strength index (RSI) moved lower in tandem with prices forming a topping pattern which reflects accelerating negative momentum. The current reading of 57, is in the middle of the neutral range and also reflects consolidation.

Natural Gas Inventories Where In Line with Expectations

The Energy Information Administration reported that working gas in storage was 3,037 Bcf as of Friday, October 12, 2018. This represents a net increase of 81 Bcf from the previous week. Expectations were for an increase of 82 Bcf for the week. Stocks were 601 Bcf less than last year at this time and 605 Bcf below the five-year average of 3,642 Bcf. At 3,037 Bcf, total working gas is below the five-year historical range. The decline below this long term range is troubling and should put upward pressure on natural gas prices.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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