Natural Gas Price Prediction – Prices Rebound from Session Lows Following Inventory Report

Natural gas prices rebounded from session lows following a larger than expected draw in natural gas inventories reported on Thursday by the Department of Energy. The weather in the US is expected to remain warmer than normal on the eastern portion of the country, but the weather in the western half of the country is expected to turn cooler. The jet stream pattern is zonal with a trough ridge pushing warm air up from the Gulf. Bulls are looking for the pattern to reverse sending colder air down from Canada.

Technicals

Natural gas prices rebounded from session lows, closing up slightly on the day. Prices have yet to recapture the breakdown level, and trading below short-term resistance near the 10-day moving average at 2.29. Support is seen near the December lows at 2.15 and then again at a weekly upward sloping trend line that comes in near 2.05. Daily medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black but the trajectory is flattening which reflects a consolidating tone.

Gas Inventories Decline More than Expected

Natural gas in storage was 3,411 Bcf as of Friday, December 13, 2019, according to the EIA. This represents a net decrease of 107 Bcf from the previous week. Expectations were for a 84 Bcf decline in stockpiles according to survey provider Estimize. Stocks were 618 Bcf higher than last year at this time and 9 Bcf below the five-year average of 3,420 Bcf. At 3,411 Bcf, total working gas is within the five-year historical range.