Natural Gas Prices Test Wednesday’s High and Fail

Natural gas prices have experienced a volatile week, initially moving to the downside, but found support at the $3.11/MMbtu area on Tuesday. The contract for May delivery on the New York Mercantile Exchange then reversed to the upside on Wednesday. However, the $3.22 area has provided resistance and was tested and failed in today’s session. The contract is now off the high of the session and trading at $3.16/MMBtu.

In today’s session, the latest natural gas storage report from the Energy Information Administration (EIA) was released. It indicated that natural gas storage recorded a build of 54 Billion Cubic feet (Bcf) for the week ending April 14th.

Working gas in storage was 2,115 Bcf as of Friday, April 14, 2017, according to EIA estimates. Stocks were 368 Bcf less than last year at this time and 282 Bcf above the five-year average of 1,883 Bcf. At 2,115 Bcf, total working gas is within the five-year historical range.

Natural gas prices moved lower today, despite the Stochastic being at an oversold level. This warns of the potential for a further decline to test Tuesday’s low at $3.11. On a drop below this level, the next support comes into play at the low established March 28th, at $3.09/MMBtu.

On the upside, resistance has now been established at the $3.22 level. A move above this area is required to suggest a retest of the up trendline which has defined price action since late February can take place. A move above this trendline, which currently comes in near $3.29, is required to improve the broader outlook. On a move above this trendline, the next level to watch is the April highs at $3.35/MMbtu. A break above this level is required to suggest a return to the January high at $3.50 is possible.

May Natural Gas Futures Contract Daily Chart

NatGas_042017

Tracy L. Morganthall, CMT, has been a Technical Market Analyst for more than 20 years. She has experience analyzing and producing reports on equities, both domestic and international markets, as well as Forex and commodities. She attended Trenton State College in Trenton, New Jersey, earning a Bachelor's in Finance.