Natural Gas Price Prediction – Prices Whipsaw as Inventories Rise More than Expected

David Becker
Natural Gas
Natural Gas

Natural gas prices whipsawed on Thursday following a larger than expected build in natural gas inventories.  Prices had been surging higher over the past week, as colder than normal weather is expected to cover most of the Midwest of the United States for the next 2-weeks. The colder than normal weather should buoy heating demand ahead of the withdrawal season that could see storage move very low levels. Demand for natural gas is on the rise. According to EIA’s Natural Gas Monthly, natural gas consumption and exports averaged 93.4 billion cubic feet per day during the first half of 2018, or 12% greater than during the first half of 2017.

Technical Analysis

Prices dumped lower following the larger than expected build in inventories but held support above the 10-day moving average at 3.09. Resistance is seen near the October highs at 3.26. Prices briefly were overbought as the RSI (relative strength index) printed a reading above 70, which could foreshadow a correction. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.

Inventories Grew More than Expected

Natural gas inventories rebounded from last week miss, by notching up gains above what was expected. According to the Energy Information Administration, working gas in storage was 2,866 Bcf as of Friday, September 28, 2018. This represents a net increase of 98 Bcf from the previous week. This compares to expectations that inventories would climb by 88Bcf. Stocks were 636 Bcf less than last year at this time and 607 Bcf below the five-year average of 3,473 Bcf. At 2,866 Bcf, total working gas is below the five-year historical range. The colder than normal weather could generate significant demand which could further reduce inventories ahead of the withdrawal season which begins on November 1.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.