Natural Gas Price Prediction – Prices Edge Higher, Following Larger than Expected Inventory Draw
Natural gas prices attempted to move higher on Thursday, following a larger than expected draw in natural gas inventories. The trajectory of the draw puts the current level of natural gas inventories near the middle of the range. Price are well below the average for the past 5-years. The weather is expected to remain much colder than normal in the west and much warmer than normal on the east coast. This dynamic is unlikely to drive natural gas inventories lower.
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Technicals
Natural gas prices made a higher high and a higher low which could be signaling a bottom in prices. Prices close slightly above the 10-day moving average seen near 1.86. Prices could rise to a downward sloping trend line that comes in at 1,97. A close above this level would lead to a test of the December lows around 2.10. Medium term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic also generated a crossover buy signal as it rumbled out of oversold territory which is a sign of accelerating positive momentum.
Inventories Draw More than Expected
The Energy Information Administration reported that natural gas in storage was 2,609 Bcf as of Friday, January 31, 2020. This represents a net decrease of 137 Bcf from the previous week. Expectations were for a 122 Bcf draw according to survey provider Estimze. Nautarl gas stocks were 615 Bcf higher than last year at this time and 199 Bcf above the five-year average of 2,410 Bcf. At 2,609 Bcf, total working gas is within the five-year historical range.