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David Becker

Natural gas prices whipsawed initially moving average on Thursday, following a smaller than expected build in natural gas inventories reported on Thursday by the Department of Energy. The weather is expected to become warmer than normal over the next 6-10 and 8-14 days, but over the next 5-days the weather over the eastern portion of the United States will remain cooler than normal buoying natural gas heating demand. There are no expected disturbances in the Atlantic or Gulf of Mexico that are likely to turn into a tropical cyclone over the next 48-hours. The hurricane season officially ends at the end of November.

Technical Analysis

Natural gas prices whipsawed and rose but settled off the highs of the trading session. Support is seen at the November lows at 2.52. A break of this level would see a test of the October lows at 2.38. Resistance is seen near the 10-day moving average at 2.73. Short term momentum is turning negative to neutral as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in red with a declining trajectory which points to lower prices.

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Inventories Rose Less than Expected

The Energy Information Administration reported that working gas in storage was 3,732 Bcf as of Friday, November 8, 2019. This represents a net increase of 3 Bcf from the previous week. Expectations were a wide range but were 10 Bcf According to survey provider Estimize. Stocks were 491 Bcf higher than last year at this time and 2 Bcf above the five-year average of 3,730 Bcf. At 3,732 Bcf, total working gas is within the five-year historical range.

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