Natural Gas Prices Surge Nearly 9% Ahead of Inventory Report

Key Insights

• Natural gas prices surged nearly 9%.
• News that Russia was cutting off Poland buoyed prices.
• The EIA releases its inventory report Thursday.

Natural gas prices moved higher on Wednesday ahead of the Thursday inventory report from the Department of Energy. Expectations are for inventories to rise by 36 Bcf, according to a survey provided by crowdsourcing company Estimize. The weather is expected to be mixed, with cold-weather covering the northern states and warmer than average weather in the south during the next 2-weeks.

U.S. Natural gas production continues to accelerate. The EIA reports that In 2021, U.S. natural gas production increased by 2% and reached 118.8 billion cubic feet per day monthly in December 2021, the highest on record. Three regions that drove this growth include Appalachia, Permian, and Haynesville, which collectively accounted for 59% of gross withdrawals in 2021 compared with 24% in 2011.

Technical Analysis

Natural gas prices surged on Wednesday. Prices pushed through resistance which is now support 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.

Medium-term momentum is negative but decelerating. The MACD histogram is printing in negative territory with a rising trajectory which points to consolidation. The MACD (moving average convergence divergence) generated a crossover sell signal. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal.