Natural Gas stuck in consolidation
- Natural Gas starts the week mildly in the green, up 0.25%.
- The US Dollar faces headwinds with UAW strikes and US Government shutdown tail risk.
- US Natural Gas prices are in an ascending trendline formation and could break above $3.
Natural Gas prices are mildly ticking higher this Monday at the start of the week with few headlines to report from the weekend. Most noticeable is that EU gas storage has risen yet again over the weekend. Europe is now at 94.74% full ahead of the winter season.
The US Dollar (USD) confirmed its status as king after a quite volatile week. The US Federal Reserve could not have been more clear and confirmed yet again that rates in the US will stay higher for longer. This puts the US Dollar as the strongest partner in most trading pairs due to interest rate differentials.
Natural Gas is trading at $2.93 per MMBtu at the time of writing.
Natural Gas news and market movers
- Uniper SE, the German utility service, has sealed a deal for US LNG (Liquified Natural Gas) deliveries until 2030 as the company does not expect demand to tail off anytime soon.
- European gas storage levels are nearly 95% full ahead of the winter. This keeps a lid on any jumps in demand.
- Further cuts at the Skarv gas field in Norway are taking place due to process problems. These outages will be lasting until early next month, according to network operator Gassco AS.
- More news out of Norway, flows from the country should continue to increase as capacity at the giant Troll field is further coming online after a prolonged period of outages due to maintenance.
- European gas prices locally should be easing in the upcoming colder months as contracts for that period are becoming less expensive. November and December contracts in particular saw a contraction in prices.
- Australian strikes have been called off, which could now risk breaking the equilibrium in the market toward an oversupply of LNG.
Natural Gas Technical Analysis: Will bullish triangle hold?
Natural Gas appears to be in a bullish triangle on the daily chart with a triple top at $3.06 on the top side. Meanwhile, higher lows are being formed with the green ascending trendline showing support since the beginning of September. Expect to see a breakout above $3.06, which means natural gas prices are set to jump higher.
Awaiting the breakout of the triangle, $3 remains a key level that needs to be broken. Seeing the current equilibrium, a catalyst is needed to move the needle upwards. Gas prices could rally to $3.25 in a bullish triangle breakout, testing the upper band of the ascending trend channel.
On the downside, the ascending trendline at $2.90 should support any attempts to break lower. The 200-day Simple Moving Average (SMA) at $2.80 could act as a circuit breaker in case there is a nosedive move. Should that give way on a downside move, some area will be crossed before the next support kicks in at $2.75. This level aligns with the 55-day SMA, which is likely to step in to avoid any price crashes in the commodity.
XNG/USD (Daily Chart)
Natural Gas FAQs
What fundamental factors drive the price of Natural Gas?
Supply and demand dynamics are a key factor influencing Natural Gas prices, and are themselves influenced by global economic growth, industrial activity, population growth, production levels, and inventories. The weather impacts Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources impacts prices as consumers may switch to cheaper sources. Geopolitical events are factors as exemplified by the war in Ukraine. Government policies relating to extraction, transportation, and environmental issues also impact prices.
What are the main macroeconomic releases that impact on Natural Gas Prices?
The main economic release influencing Natural Gas prices is the weekly inventory bulletin from the Energy Information Administration (EIA), a US government agency that produces US gas market data. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, a day after the EIA publishes its weekly Oil bulletin. Economic data from large consumers of Natural Gas can impact supply and demand, the largest of which include China, Germany and Japan. Natural Gas is primarily priced and traded in US Dollars, thus economic releases impacting the US Dollar are also factors.
How does the US Dollar influence Natural Gas prices?
The US Dollar is the world’s reserve currency and most commodities, including Natural Gas are priced and traded on international markets in US Dollars. As such, the value of the US Dollar is a factor in the price of Natural Gas, because if the Dollar strengthens it means less Dollars are required to buy the same volume of Gas (the price falls), and vice versa if USD strengthens.
Reprinted from FXStreet_id，the copyright all reserved by the original author.
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