Natural Gas Price Prediction – Prices Push to New Range Ahead of Inventory Report
Natural gas prices moved higher on Tuesday rising 0.9%. Colder than normal weather that is currently covering the mid-west and east coast is buoying prices. Inventories are near the lower end of the 5-year average range but prices are well below the 5-year average prices. Withdrawals last week were in line with expectations. Traders await this weeks inventory report scheduled to be released on Thursday. Expectations are for a 140 Bcf draw according to estimize.
Technical Analysis
Natural gas prices moved higher on Tuesday and closed at a 5-week high. Prices have pierced through resistance which was former support near 2.87. If prices are able to close above this level for several days, a new range could be created with a high near 3.66. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic is also moving higher which reflects accelerating positive momentum. The current reading on the fast stochastic is 94, above the overbought trigger level of 80 which could foreshadow a correction.
The EIA Reports of Strong Inventory Draws
Net withdrawals from storage totaled 166 Bcf for the week ending February 22, compared with the five-year average net withdrawals of 104 Bcf and last year’s net withdrawals of 85 Bcf during the same week. Working gas stocks totaled 1,539 Bcf, which is 424 Bcf lower than the five-year average and 154 Bcf lower than last year at this time. The average rate of net withdrawals according to the EIA, from storage is 11% lower than the five-year average so far in the withdrawal season. If the rate of withdrawals from storage matched the five-year average of 8.8 Bcf per day for the remainder of the withdrawal season, total inventories would be 1,212 Bcf on March 31, which is 424 Bcf lower than the five-year average of 1,636 Bcf for that time of year.
This article was originally posted on FX Empire
