Natural Gas Price Prediction – Prices Trade Sideways as Stockpiles Decline

Inventories decline in line with expectations
David Becker
Natural gas daily chart, March 21, 2019

Natural gas prices moved sideways on Thursday as the Energy Information Administration delivered an in line inventory draw. The weather is expected to remain normal to belove normal for the next 6-10 day and 8-14 days. The calendar is fast approaching the end of the withdrawal season. It appears that inventories will be 8-10% below the 5-year average of inventories for this time of year. With production expected to continue to climb, prices will have a difficult time breaking higher.

Technical Analysis

Natural gas prices moved sideways as historical volatility continued to collapse. Prices appear to be hovering just below resistance near the 10-day moving average at 2.825. Suport on natural gas is seen near the March lows at 2.76. Momentum has turned negative as 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.

Natural Gas Inventories decline In Line with Expectations

The EIA reported on Thursday that working gas in storage was 1,143 Bcf as of Friday, March 15, 2019,. This represents a net decrease of 47 Bcf from the previous week. Expectations were for a 48 bcf draw. Stocks were 315 Bcf less than last year at this time and 556 Bcf below the five-year average of 1,699 Bcf. At 1,143 Bcf, total working gas is within the five-year historical range.  The EIA also reported a revision to 1-week ago. The revision caused the stocks for March 08, 2019 to change from 1,186 Bcf to 1,190 Bcf. As a result, the implied net change between the weeks ending March 01 and March 08 changed from -204 Bcf to -200 Bcf. Inventories will likely finish the injection season 8% below the 5-year average.

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