Natural Gas Price Prediction – Prices Trade Sideways Ahead of Inventory Report

Natural gas prices continue to trade in a tight range as traders get used to the shoulder months. The period between April and June is the season where the least amount of weather driven price action occurs. There is little demand for cooling, and heating season is nearly complete in early April. The weather is expected to remain normal for the next 6-10 and 8-14 days according to NOAA. Inventories remain below the 5-year average but are in the 5-year average range for this time of year. Traders await the inventory report scheduled to be released on Thursday. Expectations are for a -1 Bcf draw according to Estimize. The range is -30 to +40.

Technical Analysis

Medium-term momentum remains negative. The MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum.

Prices are oversold. The fast stochastic is printing a reading of 12, below the oversold trigger level of 20 which could foreshadow a correction. The fast stochastic also generated a crossover buy signal, which means that short term negative momentum is fading.

The EIA Reports Inventories on Thursday

The EIA reported that net withdrawals from storage totaled 36 Bcf for the week ending March 22, compared with the five-year average net withdrawals of 41 Bcf and last year’s net withdrawals of 66 Bcf during the same week. It appears that the warmer weather that covered most of the United States reduce the volumes of natural gas needed during the past 2-weeks. Working gas stocks totaled 1,107 Bcf, which is 551 Bcf lower than the five-year average and 285 Bcf lower than last year at this time.