Natural Gas Price Prediction – Prices Tumble Following Inventory Draw Miss

Natural gas prices tumbled 3.7% on Thursday following a smaller than expected draw in natural gas inventories according to a report from the Department of Energy. Much warmer than expected weather is expected to cover the eastern portion of the United States, and then moderate slightly over the next 8-14 days. The decline in LNG exports in the latest week, due to the lack of manufacturing activity in China continues to weigh on prices.

Technical Analysis

Natural gas prices moved lower on Thursday closing a fresh lows for the move after hitting 1.719 and poised to test the 2016 lows at 1.61. Resistance on natural gas prices is seen near the 10-day moving average at 1.86. Additional resistance is seen near the 50-day moving average at 2.015. Short term momentum remains negative as the fast stochastic heads lower and is poised to test oversold territory. The current reading on the fast stochastic is 23, just above the oversold trigger level of 20. Medium term momentum is above to turn negative as the fast stochastic is poised to generate 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).

Stockpiles Fall Less Than Expected

Natural gas in storage was 2,200 Bcf as of Friday, February 21, 2020, according to the EIA estimate. This represents a net decrease of 143 Bcf from the previous week. Expectations are for a 158 Bcf draw. Stocks were 637 Bcf higher than last year at this time and 179 Bcf above the five-year average of 2,021 Bcf. At 2,200 Bcf, total working gas is within the five-year historical range.