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David Becker

Natural gas prices surged more than 4% on Thursday following a larger than expected draw in natural gas stockpiles. The weather is expected to remain warmer than normal over the next 8-14 days and until the weather turns, the shorts will remain in control. On Friday, the CFTC will report this week’s commitment of trader’s report for the week ending December 10. Natural gas inventories slipped below the 5-year average but still remain in the middle of the 5-year average range for this time of year.

Technical Analysis

Natural gas prices surged more than 4% on Thursday following the EIA inventory report. Prices stop short of eclipsing resistance near the 10-day moving average at 2.33. Support is seen near the December lows at 2.16. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic now is 21 just above the oversold trigger level of 20. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory.

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Inventories Declined More than Expected

The Department of Energy reported that working gas in storage was 3,518 Bcf as of Friday, December 6, 2019. This represents a net decrease of 73 Bcf from the previous week. Expectations were for a 55 Bcf draw in stockpiles according to survey provider Estimize. Stocks were 593 Bcf higher than last year at this time and 14 Bcf below the five-year average of 3,532 Bcf. At 3,518 Bcf, total working gas is within the five-year historical range.

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