Natural Gas Price Prediction – Prices Whipsaw and Remain Rangebound
Natural gas prices whipsawed attempting to move higher but running into resistance. A warmer than normal forecast for the next 6-14 days from the National Oceanic Atmospheric Administration is undermining prices. While inventories remain below the 5-year average range for this time of year, the trajectory is becoming less negative, which is allowing prices to remain subdued. The top end of the 5-year average price range is $6.49 per mmbtu.
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Technical Analysis
Natural gas prices attempted to move higher on Tuesday but ran into resistance near the January highs at $3.05. Support is seen near an upward sloping trend line near $2.88. Additional resistance is seen near the 10-day moving average at 3.17, and then the 31.8% Fibonacci retracement level which comes in near 3.65. A Fibonacci retracement level is derived by taking a move and determining the 38% or 62% retracement level. Prices are oversold. The fast stochastic is printing a reading of 10, below the oversold trigger level of 20 which could foreshadow a correction.
Natural Gas Withdrawals Show Inventories Remain Low
The EIA recently reported that withdrawals from working gas storage are lower than the five-year average for the second week in a row. Net withdrawals from storage totaled 141 Bcf for the week compared with the five-year average net withdrawals of 144 Bcf and last year’s net withdrawals of 166 Bcf during the same week. Working gas stocks totaled 2,773 Bcf, which is 720 Bcf lower than the five-year average and 697 Bcf lower than last year at this time.
Working gas stocks’ deficit to the five-year average decreased, according to the EIA, and the deficit to the bottom of the five-year range increased. In the Lower 48 states, total working gas stocks are 450 Bcf lower than the five-year minimum, and every storage region is currently lower than the bottom of its five-year range. The weather is the only thing keeping prices capped.