Natural Gas Prices Rally Breakout Out Above Trend Line Resistance

Natural gas prices continued to surge higher on Monday. The weather is expected to be much colder than normal in the South, mid-West, and East Coast during the next 6-10 days. The weather will likely moderate during the next 8-14 days, with colder air in the mid-West and East Coast and warmer air on the West Coast. Despite the colder weather, natural gas inventories are hovering near the 5-year average for this time of year.

 Technical Analysis

On Monday, natural gas prices continued to rally, hitting a fresh contract high for 2022. Prices rallied another 5.5%%, after rallying 16% last week. Support is seen near the 10-day moving Average on at 4.23. 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. Prices are overbought as the fast stochastic is printing a reading of 87, above the overbought trigger level of 80.

Inventories Hover Near the 5-year Average

The EIA reports that after colder-than-normal temperatures in early January, along with increased liquefied natural gas exports and increased power demand compared with last year, have lessened these gains, and working natural gas is again less than the five-year average. Inventories moved above the 5-year average in December after one of the warmest December on record.