Natural Gas Prices Whipsaw Ahead of Inventory Report

Natural gas prices edged higher but settled off the session highs. The move reflects uncertainty ahead of Thursday’s inventory report from the Department of Energy. According to Natural Gas Intelligence, the median forecasting NGI model is for a decline of 121 Bcf.

Their forecast compares to the 5-year average of 166 draws in natural gas stockpiles and last years’ 324 Bcf draw in inventory. The trajectory of the draws has been downward sloping, and for prices to rally, it will need to accelerate lower.

The weather is expected to be colder than normal in the mid-West and East Coast over the next 6-10 days, but the weather is expected to become milder. A warm front will cover most of the mid-West through the South East and the West. Geopolitics are also generating volatility. The demand for natural gas in Europe outweighs supplies, and the lack of Russian natural gas will create a deficit

Technical Analysis

Natural gas prices whipsawed and moved higher but were well off the highs of the day. Support near the 10-day moving average at 4.31. Resistance is seen near the February highs at 4.86. Prices look like they are forming a small head and shoulder pattern. The 10-day moving average crossed below the 50-day moving average, which means that a short-term downtrend is now in place.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is harder to read and looks neutral. The MACD (moving average convergence divergence) index generated a crossover buy signal and a sell signal. This situation reflects consolidation.