Natural Gas Prices Rise Nearly 9% Ahead of Inventory Report

key ideas

  • Natural gas prices jumped almost 9%.
  • News that Russia was cutting off Poland supported prices.
  • The EIA publishes its inventory report on Thursday.

Natural gas prices rose Wednesday ahead of Thursday’s inventory report from the Department of Energy. Inventories are expected to rise by 36 billion cubic feet, according to a survey provided by crowdsourcing firm Estimize. The weather is expected to be mixed, with cold weather covering the northern states and warmer than average weather in the south for the next 2 weeks.

US natural gas production continues to accelerate. The EIA reports that in 2021, natural gas production in the United States increased by 2% and reached 118.8 billion cubic feet per day per month in December 2021, the highest level on record. The three regions driving this growth are Appalachia, Permian and Haynesville, which collectively accounted for 59% of gross withdrawals in 2021, up from 24% in 2011.

Technical analysis

Natural gas prices jumped on Wednesday. Prices broke through resistance which is now supported near the 10-day moving average at 7.05. Target resistance is seen near the April highs at 8.06. Support is seen near the 50-day moving average at 5.50.

The medium-term dynamic is negative but decelerating. The MACD histogram prints in negative territory with an upward trajectory that indicates consolidation. The MACD (Moving Average Convergence Divergence) has generated a cross sell signal. The short-term momentum turned positive as the fast stochastic generated a crossover buy signal.