Natural Gas Prices Fall Ahead of Inventory Report

Key Insights

• Natural gas prices dropped, bouncing into the close.
• The weather is expected to be cooler than normal but neutral.
• Natural gas shipments to LNG terminals rose.

On Wednesday, natural gas prices fell and rebounded to the close. LNG demand remains strong, and natural gas arrivals at LNG terminals continue to climb. The weather is expected to be mild over the next 2-weeks. This move-in price comes ahead of Thursday’s inventory report from the Department of Energy.

U.S. supply of natural gas declined slightly this week. The average total supply of natural gas fell slightly this week compared with the previous report week. Dry natural gas production decreased by 0.1% (0.1 Bcf/d) compared with last week’s report, and average net imports from Canada were unchanged week over week.

Technical Analysis

Natural gas prices rose on Wednesday. Support is seen near the 10-day moving average at 6.81.   Target resistance is seen near the April highs at 8.06.

Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal. Prices have declined out of the overbought territory for both the fast stochastic and the relative strength index.

Medium-term momentum has turned positive but is decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.