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David Becker
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Natural gas prices rallied 1% on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 67 Bcf draw. Good energy prices were the key drivers of inflation. The Consumer Price Index rose 4.2% year over year. Expectations were for a 3.6% increase. The month-to-month gain was 0.8%, against the expected 0.2%. Excluding food and energy prices, the core CPI increased 3% from the same period in 2020 and 0.9% monthly. Energy prices overall jumped 25% from a year earlier.

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Technical Analysis

Natural gas prices moved higher on Wednesday ahead of Thursday’s inventory report. Prices moved back above resistance which is now support near the 10-day moving average at 2.94. Target resistance is seen near the February highs at 3.06. Target support is seen near the 50-day moving average at 2.74. Short-term momentum has flipflopped and turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

U.S. supply of natural gas remains mostly flat. According to data from the EIA, the average total supply of natural gas fell slightly by 0.1% compared with the previous report week. Dry natural gas production remained mostly flat week over week at 91.6 Bcf/d, a 0.2% increase compared with the previous report week. Average net imports from Canada decreased by 5.6% from last week.

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