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David Becker

Natural gas prices moved lower on Thursday, reversing a 4-day climb. This came despite a larger than expected draw in natural gas inventories released on Thursday by the Department of Energy. The weather is expected to be cooler than normal in the south of the US and warmer than normal in the north.

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Technical Analysis

Natural gas prices edge lower but continued to trend higher, poised to test resistance near the 50-day moving average at 2.82. Support is seen near the 10-day moving average at 2.55. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. Prices are overbought. The fast stochastic is printing a reading of 89, above the overbought trigger level of 80, foreshadowing a correction.

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Inventories Draw More than Expected

Natural gas in storage was 3,330 Bcf as of Friday, January 1, 2021, according to EIA estimates. This represents a net decrease of 130 Bcf from the previous week. Expectations are for a 110 Bcf draw. Stocks were 138 Bcf higher than last year at this time and 201 Bcf above the five-year average of 3,129 Bcf. At 3,330 Bcf, total working gas is within the five-year historical range.

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