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Natural Gas Price Prediction – Prices Slide Following Inventory Report

By:
David Becker
Published: Mar 11, 2021, 20:13 UTC

Expectations were for an 85 Bcf draw

Natural Gas Price Prediction – Prices Slide Following Inventory Report

Natural gas prices moved lower on Thursday in the wake of the Department of Energy’s inventory report. The weather in the U.S. is expected to be cooler than normal over the next 6-10 days and then turning more moderate. The trajectory of inventory draws is downward sloping but the draws continue to miss expectations.

Technical Analysis

Natural gas moved lower dropping 1% despite an outside day on Wednesday. Prices have been forming a bear flag pattern. Support is seen near the March lows at 2.61. Resistance is seen near the 50-day moving average at 2.72. The 10-day moving average has crossed below the 50-day moving average which would mean that a short-term downtrend is in place. Short-term momentum has flip-flopped and turned negative. The current reading on the fast stochastic is 14, below the oversold trigger level of 20, foreshadowing a correction.

Inventories Draw Less than Expected

Natural gas in storage was 1,793 Bcf as of Friday, March 5, 2021, according to the EIA.  This represents a net decrease of 52 Bcf from the previous week. Expectations were for an 85 Bcf draw according to survey provider Estimize. Stocks were 257 Bcf less than last year at this time and 141 Bcf below the five-year average of 1,934 Bcf. At 1,793 Bcf, total working gas is within the five-year historical range.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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