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Natural Gas Price Prediction – Prices Rise on Surprise Inventory Draw

Natural gas prices rallied on Thursday following a larger than expected draw in inventories. Colder than expected weather is forecast to cover most of the US for the next 2-weeks. The cold weather pattern is moving down from Canada into the mid-west of the US and appears to be stable for both the 6-10 and 8-14 day forecasts. The decline in storage level projects a declining trajectory of inventories.

Technical Analysis

Natural gas prices rebounded on Thursday. Prices increased by more than 2%. Prices bounded at the 10-day moving average which is seen as support near 2.63. Target resistance is seen near the January lows at 2.87. This is also former support. Additional resistance is seen near the 50-day moving average at 3.73. Short-term momentum is positive as the fast stochastic recently generated a crossover buy signal. The current reading of the fast stochastic is 48, which is in the middle of the neutral range. The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Inventories Decline More than Expected

The Department of Energy reported on Thursday that working gas in storage was 1,705 Bcf as of Friday, February 15, 2019. This represents a net decrease of 177 Bcf from the previous week. Expectations where for a 150 Bcf decline according to Estimize and a 168 Bcf decline according to Bloomberg. Thje EIA reports that natural gas inventories were 73 Bcf less than last year at this time and 362 Bcf below the five-year average of 2,067 Bcf. At 1,705 Bcf, the total working gas is within the five-year historical range.

Durable Goods Orders Rose

Durable goods orders rose 1.2% in December which was the best result in the past four months, but much of the strength came from a surge in orders for aircraft. Expectations were for a climb of 1.5%. The December increase orders for durable goods followed a 1% rise in November. An increase in manufacturing is beneficial to natural gas usage.

This article was originally posted on FX Empire

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