Advertisement
Advertisement

Natural Gas Prices Drop Despite Large Inventory Draw

By:
David Becker
Published: Feb 3, 2022, 19:05 UTC

The weather is expected to be colder than normal in the south

Natural Gas Prices Drop Despite Large Inventory Draw

Natural gas moved lower on Thursday despite a larger than expected draw in natural gas inventories The weather is expected to be much colder than normal in the South, mid-West, and East Coast during the next 8-14 days. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal throughout the mid-West and West over the next 6-10 days and colder than normal in the South. El Paso, Texas is expected to see Temperatures near 19F on 2/3/22.

 Technical Analysis

On Thursday, natural gas prices dipped, testing support near an upward sloping trend line that comes in near 4.61. Additional support is seen near the 10-day moving average at 4.54. Resistance is seen near the December highs at 5.51. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an accelerating trajectory which points to higher prices.

Inventories Draw More than Expected

According to the EIA, natural gas in storage was 2,323 Bcf as of Friday, January 28, 2022. This decline represents a net decrease of 268 Bcf from the previous week. Expectations were for a 246 Bcf draw according to survey provider Estimize. Stocks were 393 Bcf less than last year at this time and 143 Bcf below the five-year average of 2,466 Bcf. At 2,323 Bcf, total working gas is within the five-year historical range.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement