Natural Gas

Natural Gas Price Prediction – Cooler Weather Generates Headwinds

Natural gas prices gapped lower and continue to face downward pressure as traders eye the current weather forecast which is expected to be cooler than normal over the next 8-14 days.  NOAA is forecasting cool weather throughout the mid-west which is moving eastward and likely reducing cooling demand from natural gas.

Technicals

Prices gapped down and are poised to test an upward sloping trend line that comes in near 2.67. Resistance on natural gas prices are seen near the 10-day moving average at 2.76. The trend is lower as the 10-day moving average recently crossed below the 50-day moving average which shows that a short-term downtrend is in place. Momentum is mixed. The fast stochastic generated a crossover sell signal, which reflects accelerating negative short-term momentum. This happened in oversold territory as the fast stochastic is printing a reading of 11.5 below the oversold trigger level of 20. The MACD histogram is printing in the red but the trajectory is rising which reflects consolidation.

Net Injections are Falling Year over year

Net injections fall lower than the five-year average for the third week in a row. Net injections into storage totaled 46 Bcf for the week ending July 13, compared with the five-year (average net injections of 62 Bcf and last year’s net injections of 31 Bcf during the same week. Working gas stocks totaled 2,249 Bcf, which is 535 Bcf lower than the five-year average and 710 Bcf lower than last year at this time.

Working Gas Inventories are on Pace to Fall Below the 5-year Average

Working gas stocks are on pace to end the refill season lower than the five-year range. Net injections into storage are 17% lower than the five-year average rate so far in the 2018 refill season. If working gas stocks match the five-year average rate of injections of 9.4 Bcf per day for the remainder of the refill season, inventories will total 3,280 Bcf on October 31, compared with the five-year low of 3,560 Bcf for that time of year. In the Lower 48 states, total working gas stocks are currently 95 Bcf higher than the bottom of the five-year range, but 9 Bcf and 36 Bcf lower than the five-year range in the East and Midwest regions, respectively.