Natural Gas Prices Tumble Following Inventory Draw

On Thursday, natural gas tumbled, giving back most of the gains it experienced on Wednesday. The move in the price of natural gas came despite a larger than expected draw in natural gas inventories. According to a recent National Oceanic Atmospheric Administration report, Cool-weather is expected to cover most of the Mid-West and North East for the next 8-14 days.

Technical Analysis

On Thursday, natural gas prices rallied, tumbled, falling 12% after rallying 13% on Wednesday. Prices retraced back to support near a downward sloping trend line at 4.33. Resistance is seen near the November highs at 5.02. Short-term momentum is 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 upward sloping trajectory which points to higher prices.

Inventories Decline More than Expected

According to the Department of Energy, natural gas in storage was 3,016 Bcf as of Friday, January 7, 2022. This level represents a net decrease of 179 Bcf from the previous week. Expectations were for a 133 Bcf draw in stock according to survey provider Estimize. Stocks were 199 Bcf less than last year at this time and 72 Bcf above the five-year average of 2,944 Bcf. At 3,016 Bcf, total working gas is within the five-year historical range.