Natural Gas Price Prediction – Prices Whipsaw but Trend is Higher

Natural gas prices moved higher on Wednesday ahead of Thursday inventory report from the Energy Information Administration. Expectations are that natural gas inventories will decline by 92 BCF according to Estimize.  This will keep inventories below the 5-year average range for this time of year. Prices are also buoyed by a colder than normal weather forecast that is expected to bring artic weather to the mid-west of the United States. Both the 6-10 and 8-14 day forecasts show colder than normal weather throughout the mid-west and east coast. There is also news that the polar vertex is broker and will be sending extremely cold weather down through Canada and into the United States for the next 30-days. This should increase heating demand in the US and help buoy natural gas prices.

Technical Analysis

Prices initially moved lower on Wednesday and then rebounded but was unable to make a higher high. Prices are now rangebound. Support is seen near the 10-day moving average at 3.15. Resistance is seen near the Fibonacci retracement at 3.65.

Momentum has turned positive as the MACD (moving average convergence divergence) index has generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices for natural gas.

Inventories Rose Last Week More than Expected

Working gas in storage was 2,614 Bcf as of Friday, January 4, 2019, according to EIA estimates. This represents a net decrease of 91 Bcf from the previous week. Stocks were 204 Bcf less than last year at this time and 464 Bcf below the five-year average of 3,078 Bcf. At 2,614 Bcf, total working gas is below the five-year historical range.