Natural Gas Price Prediction – Prices Rise on Surprise Inventory Draw

Natural gas prices moved higher on Thursday rising approximately 1% following the Department of Energy’s inventory report.  The decline was more than expected, but the range was relatively wide. The weather in the US is expected to be colder than normal throughout the mid-west and the east coast during the next 6-10 days. For the 8-14 day forecast NOAA expects the weather to be warmer than normal, which could reduce heating demand. We are currently at the tail end of the withdrawal season, and it appears that gas stockpiles will be 8% less than the 5-year average range for this time of year as the injection season begins.

Technical Analysis

Natural gas prices edged higher moving up 1%, pushing up above the 10-day moving average which is now seen as short term support at 2.84. Resistance is seen near the February highs at 2.91. Additional resistance is seen near the 50-day moving average at 3. Momentum is neutral as the MACD (moving average convergence divergence) histogram print near the zero index level with a flat trajectory which points to consolidation.

Natural Gas Inventories Decline

The EIA reported that working gas in storage was 1,186 Bcf as of Friday, March 8, 2019. This represents a net decrease of 204 Bcf from the previous week. Expectations were for inventories to decline by 168 Bcf according to Estimize. Stocks were 359 Bcf less than last year at this time and 569 Bcf below the five-year average of 1,755 Bcf. At 1,186 Bcf, the total working gas is within the five-year historical range.

Production remain very strong. The EIA reveals that  natural gas production grew by 10.0 billion cubic feet per day in 2018, an 11% increase from 2017. The growth was the largest annual increase in production on record, reaching a record high for the second consecutive year. US natural gas production measured as gross withdrawals averaged 101.3 Bcf/d in 2018, the highest volume on record.