Natural Gas Price Prediction – Prices Rise to Resistance Ahead of Inventory Report

Natural gas prices moved higher on Wednesday ahead of Thursday inventory report from the Department of Energy. Prices surged more than 2%, and are testing resistance level.  Inventories are expected to rise by 58 Bcf in week 43 of 2018 according to Estimize.  This is likely to be the last injection of the season.  The weather is expected to become colder than normal as a trough moves its way down through the mid-west where natural gas demand is the strongest.  The ridge trough pattern will keep the weather mild in the east.  A recent reclassification of working gas inventories generated a 5 BCF difference from the original number.

Technical Analysis

Natural gas prices rebounded from support near the 10-day moving average at 3.2. Resistance is seen near a downward sloping trend line that comes in near 3.30. Momentum has turned positive as the MACD (moving average convergence divergence) index 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 with an upward sloping trajectory which points to higher prices.

The EIA reported at 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. Reclassifications typically result from engineering or accounting assessments of a storage field’s operational capabilities.

ADP Private Payrolls Rose More than Expected

Private employment surged in October according to ADP and Moody’s analytics. According to ADP private payrolls increased by 227k jobs. Expectations were that private jobs would increase by 189K.  The September figures were refined lower by 12K jobs dropping to 218K from 230K.