Natural Gas Price Prediction – Prices Tumble Despite In Line Inventory Draw

Natural Gas inventories drop to lower end of 5-year average range
David Becker
Natural gas daily chart, February 07, 2019

Natural gas prices tumbled on Thursday, despite an inline draw of inventories according to the department of energy. Inventories are below the 5-year average range for this time of year, but prices are well below the 5-year average price. Mid-west inventories are also now below they where last year at the same time of year. The weather pattern remains in place where the weather over the next 2-weeks is expected to be colder than normal throughout the west coast and warmer than normal through out most of the east coast.

Technical Analysis

Natural gas prices dropped 3.4% tumbling to support near a horizontal trend line that equal the 2018 lows at 2.55. A close below the 2.50 level could lead to a test of the 2016 lows ta 1.55. Resistance is seen near former support which is 2.87. Medium term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices. Prices are oversold on a short term basis. The fast stochastic is printing a reading of 2, well below the oversold trigger level which could foreshadow a correction. On a medium term basis the RSI is printing a reading of 32, just above the oversold trigger level of 30.

Gas Inventories Decline in Line with Expectations

The Energy Information Administration reported that working gas in storage was 1,960 Bcf as of Friday, February 1, 2019. This represents a net decrease of 237 Bcf from the previous week. Expectations where for a decline in stockpiles by 230 Bcf according to Estimize. Stocks were 135 Bcf less than last year at this time and 415 Bcf below the five-year average of 2,375 Bcf. At 1,960 Bcf, total working gas is within the five-year historical range, but hovering near the very lower end of range for this time of year.

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