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David Becker
Natural gas daily chart, May 07, 2019

Natural gas prices whipsawed trading in a tight range as the Energy Department reported inventories that were lower than expected. Natural gas inventories have been rising at a steady climb, and have a trajectory which points to reaching the 5-year average range. Prices have been trending lower until they broke higher on Wednesday. The weather is expected to be colder than normal throughout most of the mid-west and the east coast, but May is generally a low demand month for natural gas.

Technical Analysis

Natural gas prices were nearly unchanged on Thursday moving slightly lower, and remaining above support which is a downward sloping trend line that comes in near 2.58. Resistance is seen near the 50-day moving average at 2.68. Momentum has turned positive as the MACD (moving average convergence divergence) 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 US Department of Energy reported on Thursday that working gas in storage was 1,547 Bcf as of Friday, May 3, 2019. This represents a net increase of 85 Bcf from the previous week. Expectations were for a 123 Bcf draw in stockpiles according to Estimize. Expectations according to Bloomberg were for a 90 Bcf build. Stocks were 128 Bcf higher than last year at this time and 303 Bcf below the five-year average of 1,850 Bcf. At 1,547 Bcf, total working gas is within the five-year historical range. Surprisingly prices are below the 5-year average range for this time of year, and have had a very difficult time making headway. This is because production remains robust, and with investment coming into the Permian basin, expectations are for rising production to continue to increase.

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