Natural gas prices moved slightly lower on Thursdays following the inventory report from the Department of Energy. The weather is expected to be much colder than normal in the western part of the US and much warmer than normal on the east coast which should net reduce heating demand. Hurricane Eta is making its way through Latin America and is now expected to reverse and head toward the Gulf of Mexico. The trajectory placing the storm on a course to hit Florida, and it is not expected to impact any natural gas infrastructure.
Technical Analysis
Natural gas prices moved lower and closed below support near an upward sloping trend line that comes in near 3.04. Resistance is seen near the 50-day moving average at 3.20. The 10-day moving average is crossed below the 50-day moving average which means that a short-term downtrend is in place. Medium-term momentum is negative as the MACD (moving average convergence divergence index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.
Inventories Decline More than Expected
Natural gas in storage was 3,919 Bcf as of Friday, October 30, 2020, according to the EIA. This represents a net decrease of 36 Bcf from the previous week. Expectations were for a 27 Bcf draw according to survey provider Estimize. Stocks were 200 Bcf higher than last year at this time and 201 Bcf above the five-year average of 3,718 Bcf. At 3,919 Bcf, total working gas is within the five-year historical range.
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