Natural gas prices tumbled on Thursday despite a larger than expected draw in natural gas inventories reported on Thursday by the Department of Energy. While these statistics are important they are rear-iew mirror items, a trader’s are focused on the Weather. The weather over the next 6-10 and 8-14 days is expected to be milder, with warm weather on the west coast and colder weather on the east coast.
Natural gas prices tumbled declining 2% and breaking through support levels in route to the 2016 lows at 1.60. The first target for support is a long term weekly trend line that comes in near 2.07. Resistance is seen near the 10-day moving average at 2.15. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal and is accelerating lower. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.
Inventories Decline More than Expected
The EIA reported on Thursday that working gas in storage was 3,039 Bcf as of Friday, January 10, 2020. This represents a net decrease of 109 Bcf from the previous week. Expectations were for a 95 Bcf reduction in stockpiles according to survey provider Etimize. Stocks were 494 Bcf higher than last year at this time and 149 Bcf above the five-year average of 2,890 Bcf. At 3,039 Bcf, total working gas is within the five-year historical range.
This article was originally posted on FX Empire
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