Natural Gas Price Prediction – Prices Slip Following Inventory Report

Natural gas prices moved lower on Thursday following the Department of Energy’s report on stockpiles. The weather is expected to be much cooler than normal through the western portion of the United States and warmer than normal across the east over the next two weeks. This should increase heating demand in the west, and generate a divergence in natural gas prices. Since the natural gas contract is in Louisiana, it’s unlikely to feel the impact of the cold western weather. If the weather moves east into the mid-west prices will be impacted.

Technical Analysis

Natural gas prices moved lower on Thursday but bounced from session lows. Support is seen near the 50-day moving average at 2.67 and then the 10-day moving average at 2.63. Resistance is seen near the January highs at 2.90. Medium-term momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs when 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 RSI seemed to top out which reflects decelerating positive momentum.

Inventories Decline Less than Expected

According to EIA estimates, natural gas in storage was 2,881 Bcf. This declined represents a net decrease of 128 Bcf from the previous week. Expectations were for a 147 Bcf draw, according to survey provider Estimize.  Stocks were 78 Bcf higher than last year at this time and 244 Bcf above the five-year average of 2,637 Bcf. At 2,881 Bcf, the total working gas is within the five-year historical range.