Natural Gas Price Prediction – Prices Rebound From Session Lows on Cold Weather Forecast

Natural gas prices rebounded from the lows of the session, and finished down approximately 1.1%.  Colder than normal weather is forecast to cover most of the US for the next 2-weeks putting a bid under prices. Net injections are lower than the 5-year average.

Technical Analysis

Natural gas prices rebounded from session lows, as traders took profits on short trades ahead of the weekend. Prices bounded near the 3.10 with additional support seen near the 50-day moving average at 3.02.  Resistance is seen near the 10-day moving average at 3.21. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

The EIA reported on Thursday that net injections fall lower than the five-year average. Net injections into storage totaled 58 Bcf for the week ending October 19, compared with the five-year average net injections of 77 Bcf and last year’s net injections of 63 Bcf during the same week. Working gas stocks totaled 3,095 Bcf, which is 624 Bcf lower than the five-year average and 606 Bcf lower than last year at this time.

Additionally, a reclassification of working gas stocks during the report week reduces weekly net change. Non-flow-related adjustments decreased working gas stocks by approximately 5 Bcf in the South Central nonsalt region for the report week. As a result, the weekly net change understates the volume of natural gas that was injected into working gas. The implied flow for the week is an injection of 63 Bcf to working gas stocks.

Working gas stocks’ deficit to the five-year average increases, and the deficit to the bottom of the five-year range also increases. The average rate of net injections into storage is 14% lower than the five-year average so far in this refill season. If the rate of injections into storage matched the five-year average of 8 Bcf/day for the remainder of the refill season, total inventories will be 3,191 Bcf on October 31, which is 624 Bcf lower than the five-year average of 3,815 Bcf for that time of year.