Natural Gas Prices Slide Following EIA Inventory Report

Key Insights

• Natural gas prices dropped.
• Prices whipsawed and closed near the lows.
• The EIA released its inventory report.

Natural gas prices whipsawed and moved lower on Thursday following the inventory report from the Department of Energy. The information was basically in line with expectations, so most of the price action was likely profit-taking at current levels. The weather is expected to be mixed, colder in the north and northeast and warmer throughout the south and southeast.

According to the U.S. Commerce Department, Gross domestic product unexpectedly fell by 1.4% in Q1. Expectations were for a 1% increase. The price deflator, used to gauge inflation, rose 8% yearly. Most of the losses came in the trade balance as imports surged relative to exports. Government spending also dropped. Consumer spending held up well for the quarter, rising 2.7%.

Technical Analysis

Natural gas prices dropped sharply, closing down 5% near the session lows. Support is seen near the 20-day moving average at 6.63. Target resistance is seen near the April highs at 8.06. Momentum has seemed to stall, and prices are now moving sideways in a large range.

Medium-term momentum is negative. The MACD histogram is printing in negative territory with a flat trajectory which points to consolidation. The MACD (moving average convergence divergence) generated a crossover sell signal. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal.