Natural Gas Price Prediction – Prices Whipsaw Ahead of Inventory Report

David Becker
Natural Gas
Natural Gas

Natural gas prices surged higher on Wednesday up to 2.89 but were unable to hold on to gains.  Prices were buoyed by warmer than normal weather and the prospect that a disturbance in the Gulf of Mexico now has a 70% chance of becoming a cyclone.  Tropical storm Isaac is making its way into the Caribbean and should find its way toward the Gulf of Mexico which could disturb infrastructure that produces natural gas.

Technical Analysis

Natural gas prices attempted to move higher but were unable to hold on to gains. Prices close below resistance seen near the 10 day and 50-day moving averages at 2.84 and 2.83. Support on natural gas is seen near an upward sloping trend line that comes in near 2.76. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the red with a flat trajectory which reflects consolidation.

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Injections Fall

Natural gas net injections fall to slightly less than the five-year average. Net injections into storage totaled 63 Bcf for the week ending August 31, compared with the five-year average net injections of 65 Bcf and last year’s net injections of 60 Bcf during the same week. Working gas stocks totaled 2,568 Bcf, which is 590 Bcf lower than the five-year average and 643 Bcf lower than last year at this time.

Stocks are Below Average

Working gas stocks remain lower than the five-year range and continue to fall. The average rate of net injections into storage is 17% lower than the five-year average so far in the 2018 refill season. If the rate of injections into working gas matches the five-year average of 10.8 Bcf/d for the remainder of the refill season, total inventories will be 3,225 Bcf on October 31, which is 335 Bcf lower than the five-year low of 3,560 Bcf. In the Lower 48 states, total working gas stocks are currently 26 Bcf lower than the five-year range in the East region and 84 Bcf lower than the five-year range in the Midwest. The South Central region posted working gas stocks that are 4 Bcf lower than the bottom of the region’s five-year range, and its nonsalt facilities are 30 Bcf higher than its lower bound. Total working gas stocks in the Lower 48 states are now 167 Bcf lower than the five-year range.

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