Natural Gas Price Prediction – Prices Whipsaw and Close Lower Despite Robust Inventory Draw

Natural gas prices whipsawed on Thursday following the Energy Departments report on Inventories. Prices first move higher and then dropped late in the trading session finishing on the lows of the day. The outside day reversal pattern is a negative sign. The weather is expected to be cooler than normal during the next 8-14 days, moderating from the colder than normal weather that is expected to cover most of the United States during the next 6-10 days.

Technical Analysis

Natural gas prices whipsawed and closed on the lows of the session forming an outside day reversal pattern. This is a higher high, a lower low and a lower close. This comes as prices had broken out above trend line support, but appear to have held the breakout level, which is support seen near 1.91. Additional support is seen near the 10-day moving average at 1.85. Resistance is seen near the February highs at 2.03. Short term momentum is negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 59, coming from an overbought reading which reflects accelerating negative momentum.

Working Gas in Storage Drops More than Expected

The Energy Information Administration reported that natural gas in storage was 2,343 Bcf. This represents a net decrease of 151 Bcf from the previous week. The expectation had been for a 147 Bcf draw in natural gas inventories according to survey provider Estimize. Stocks were 613 Bcf higher than last year at this time and 200 Bcf above the five-year average of 2,143 Bcf. At 2,343 Bcf, total working gas is within the five-year historical range.