Natural Gas Prices Drop Despite Robust Inventory Draw

Natural gas prices reversed course on Thursday despite a larger than expected draw from inventories that could have been a function of declines from the base case given its injection season.  Prices dropped below support which is now seen as resistance near the 10-day moving average at 2.704. Target support is seen near an upward sloping trend line that comes in near 2.60. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal.

Working gas in storage was 1,299 Bcf as of Friday, April 13, 2018, according the EIA. This represents a net decrease of 36 Bcf from the previous week. Expectations were for a 18 Bcf decline. Stocks were 808 Bcf less than last year at this time and 449 Bcf below the five-year average of 1,748 Bcf. At 1,299 Bcf, total working gas is within the five-year historical range. Some natural gas storage operators have reported net withdrawals from base gas, beginning with the week ending April 6, 2018. The cumulative net withdrawals of base gas were treated as negative working gas stocks and are reflected in the working gas inventories. As a result, a small portion of this week’s reported net change includes flows from base gas.

U.S. Philly Fed manufacturing index edged up

U.S. Philly Fed manufacturing index edged up 0.9 points to 23.2 in April after sliding 3.5 points to 22.3 in March. The index is down from the 28.8 recent high from October, and the 35.5 two-year peak from May. The index has held solidly above 20, however, since November 2016. The employment component rose to 27.1 from 25.6, and is the highest since 30.7 in October, with the workweek rising to 21.6 from 12.8. But new orders dropped to 18.4 from 35.7. Price paid climbed to 56.4 from 42.6, with prices received at 29.8 from 20.7. The 6-month outlook index declined to 40.7 from 47.9 and is the lowest since July. The future employment index slipped to 34.6 from 37.1, with new orders at 37.2 from 48.8, prices paid at 66.8 from 62.8, prices received at 47.9 from 51.3, and capital expenditures at 29.8 from 35.9.