Natural Gas Price Prediction – Prices Consolidate Following Inventory Report

Natural gas prices rebounded from session lows, closing in the black despite a smaller than expected draw in natural gas inventories reported by the Department of Energy. For the week natural gas prices were down 1.7%. The subdued movement of natural gas prices comes despite a surge in oil prices which were driven by geopolitical risks. The weather in the US is bifurcated. While the west is expected to be colder than normal over the next 8-14 days, the east coast is forecast to be much warmer than normal according to the most recent forecast from NOAA.

Technicals

Natural gas prices dropped were nearly unchanged on Friday following the Energy Department’s report on natural gas stockpiles. Prices pushed through the December continuation contract lows at 2.15, which is now seen as short term resistance. Additional resistance is seen near the 10-day moving average near 2.21. Support on natural gas prices can be seen by looking at a long term trend line on a weekly chart that comes in near 2.07. Momentum has now turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD index (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Inventories Decline Less than Expected

Th Energy Information Administration reported that natural gas in storage was 3,192 Bcf as of Friday, December 27. This represents a net decrease of 58 Bcf from the previous week. Expectations were for a 83 Bcf draw according to survey provider Estimize. Stocks were 484 Bcf higher than last year at this time and 38 Bcf below the five-year average of 3,230 Bcf. At 3,192 Bcf, total working gas is within the five-year historical range.