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David Becker
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Crude Oil daily chart, May 14, 2019

Natural gas prices whipsawed initially moving lower and then rebounding and settling the session up slightly more than 1%. This came on the heels of the Department of Energy’s inventory report which basically came out in line with expectations.  The trajectory of the gains, continue to point to higher inventories as the current levels attempt to get back to the 5-year average level. The 5-year average price of natural gas is $3 per mmbtu, which provides about 50 cents per mmbtu of upside if demand started to pick up. The weather is expectect to remain near normal for the next 8-14 days, which will keep demand for residential consumption steady. The next big events are supply disruptions from storms. A trade deal that would begin to accelerate LNG exports back to China without a 25% tariff would also likely give prices a pop.

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Technical Analysis

Natural gas prices rebounded after testing the 10-day moving average which is seen as short-term support near 2.60. Resistance is seen near the 50-day moving average at 2.73. Short-term momentum turned positive as the fast stochastic generated a crossover sell signal. This indicator has whipsawed along with prices. The current reading of 78 is just below the overbought trigger level of 80. Medium term momentum is neutral to positive as the MACD (moving average convergence divergence) histogram is printing in the black with a gradually increasing trajectory which points to consolidating to higher prices.

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The EIA Reports Inventories that are In Line with Expectations

The EIA reported that working gas in storage was 1,653 Bcf as of Friday, May 10, 2019. This represents a net increase of 106 Bcf from the previous week. Expectations were for a 106 Bcf Increase. Stocks were 130 Bcf higher than last year at this time and 286 Bcf below the five-year average of 1,939 Bcf. At 1,653 Bcf, total working gas is within the five-year historical range.

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