Natural Gas Price Prediction – Prices Slide Despite Inventory Draw

Natural gas prices moved lower on Thursday despite a larger than expected draw in natural gas stockpiles. The weather is expected to be cooler than average on the western half of the U.S. and normal to warmer than average on the east coast of the United States. President-Elect Biden is expected to give a speech in the evening in the United States that will outline his stimulus plan. This could be an impetus to help prices gain traction.

Technical analysis

Natural gas prices moved lower on Thursday, breaking through support near trend line resistance that coincides with the 10-day moving average near 2.68. Target support on natural gas is seen near the January lows at 2.60. The resistance which is former support is the 10-day moving average and then the 50-day moving average at 2.74. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 63, down from 70, which reflects accelerating negative momentum. Medium-term positive momentum is decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

Inventories Declined More than Expected

Natural gas in storage was 3,196 Bcf as of Friday, January 8, 2021, according to the EIA. This represents a net decrease of 134 Bcf from the previous week. Expectation were for a 131 Bcf draw according to survey provider Estimize. Stocks were 126 Bcf higher than last year at this time and 218 Bcf above the five-year average of 2,978 Bcf. At 3,196 Bcf, total working gas is within the five-year historical range.