Natural Gas Price Prediction – Prices Whipsaw as Cold Weather offset Inventory Miss

Natural Gas prices whipsawed on Thursday following the inventory report from the Department of Energy. Prices made a higher high but were unable to hold up at elevated levels. The weather is expected to much colder than normal over the next 6-10 days and then colder than normal, moderating slightly during the 8-14 days over most of the United States. The trajectory of inventories continues to be downward sloping and the cold weather in the US will likely take stockpiles down to the average of the last 5-years in the near future.

Technical Analysis

Natural Gas price attempted to move higher but failed to gain traction above $3 per mmbtu. Support is seen near the 10-day moving average at 2.84. Resistance is seen near the February highs at 3.06.
Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in positive territory with a declining trajectory which points to consolidation.

Inventories Fall Less than Expected

Natural gas in storage was 2,518 Bcf as of Friday, February 5, 2021, according to the EIA. This represents a net decrease of 171 Bcf from the previous week. Expectations were for a 183 Bcf draw according to survey provider Estimize. Stocks were 9 Bcf less than last year at this time and 152 Bcf above the five-year average of 2,366 Bcf. At 2,518 Bcf, total working gas is within the five-year historical range.