Natural gas prices fell on Thursday following a weekly inventory report released by the Department of Energy. The release showed that the stockpiles grew in line with expectations of 103 BCF. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days, which will maintain inventory clearance at an average rate. Everyone will keep an eye on Friday’s rig count data. While expectations are only for 1-natural gas rig degradation, oil numbers will be more relevant. Oil rig counts have fallen below the 2016 lows, which will result in a decline in natural gas production if the oil spill is removed.
Natural gas prices rose 3.7% on Thursday. Support has been seen near June contract lows at 121.70. The resistance is seen near the 10-day moving average at 132. The 10-day moving average has gone below the 50-day moving average, meaning that a short-term downtrend is now in place. The short-term momentum has turned positive as a sharp stochastic has generated a crossover buy signal in the oversold region. The current reading on the sharp stochastic is 15 below the oversold trigger level of 15, which may advance a correction. Medium-term momentum is negative because MACD (moving average convergence deviation) is a downward-tilted trajectory in red with histogram print indicating low prices.
In line with inventory expectations
The EIA reported that as of Friday, May 8, 2020, natural gas in storage was 2,422 bcf. This represents a net increase of 103 Bcf from the previous week. According to the survey provider Estimate, there were expectations for a 103 BCD build. The stock was 799 bcf higher than last year at this time and 413 bcf above the five-year average of 2,009 bcf. At 2,422 BCF, the total working gas is within the five-year historical range.