Natural Gas Price Prediction – Prices Consolidate Following Inventory Report

Natural gas prices moved higher but remain in a relatively tight range following a slightly larger than expected draw in natural gas inventories. The EIA released its inventory estimate on Thursday, and the trajectory of the draws have kept prices above the average of the 5-year range. The weather throughout the mid-west and the east coast are expected to be normal to warmer than normal during the next 6-10 and 8-14 days. The weather on the west coast is expected to initially be colder than normal and then moderate.

Natural gas prices were nearly unchanged following the inventory report from the Department of Energy. Prices edge above support near the 10-day moving average at 1.83. Resistance is seen near the February highs at 1.91. 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 crossed above the zero index level and has an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal in oversold territory and is also accelerating higher.

Gas Inventories Dropped More than Expected

The EIA reported that natural gas in storage was 2,494 Bcf as of Friday, February 7, 2020. This represents a net decrease of 115 Bcf from the previous week. Expectations were for a 117 Bcf draw in stockpiles according to survey provider Estimize. Stocks were 601 Bcf higher than last year at this time and 215 Bcf above the five-year average of 2,279 Bcf. At 2,494 Bcf, total working gas is within the five-year historical range.