Natural Gas extends retracement on easing tensions in Gaza
- Natural Gas tries to snap its four-day losing streak on Tuesday.
- Traders assess a mixture of data, while European Gas storages are 73.41% full.
- The US Dollar Index trades a touch higher after its downbeat performance on Monday.
Natural Gas price (XNG/USD) trades broadly flat on Tuesday and holds above the $2.80 level while trying to avoid a five-day losing streak. The easing pressure over the energy commodity price comes after Israel Prime Minister Benjamin Netanyahu dismantled its war cabinet, and convoys with humanitarian aid were allowed into the Gaza region on June 17th. This defuses a period of stress in the region ever since October 10, 2023, when Hamas attacked the Israeli music festival.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, started the week on the back foot, though it is mildly in the green ahead of US Retail Sales data for May, which will be released later in the day. Markets are starting to dial down the European election risk and are beginning to focus back on US data. Add no less than six US Federal Reserve (Fed) speakers lined up for this Tuesday, and the Greenback is set to face some substantial moves.
Natural Gas is trading at $2.87 per MMBtu at the time of writing.
Natural Gas news and market movers: Hard to choose which data point counts
- According to Bloomberg data, European combined Liquified Natural Gas (LNG) storages are filled up nearly 73.41%, back at levels from mid-January earlier this year.
- Shell Plc will buy LNG trader Pavilion Energy from the Singaporean state-owned company Temasek Holdings. Pavilion Energy trades and ships LNG in Asia and Europe, Reuters reports.
- Norwegian gas flow into Europe is back to normal after a series of unforeseen outages, Gassco reports to Bloomberg.
- Var Energi and VNG extend their collaboration for another 12 years, with an agreement from Var Energi to deliver 5 billion cubic meters of LNG to VNG, Bloomberg reports.
Natural Gas Technical Analysis: Europe’s reserves on track
Natural Gas prices are set to ease further despite efforts from traders to keep XNG prices at current levels. With European Ggas storages on track to be filled up in time when the heating season kicks in, the risk of sluggish demand could take over. Add in there the easing tensions from the Middle East, and the near term outlook for LNG looks bleak.
The pivotal level near $3.08 (the high from March 6, 2023) remains key after its false break last week. In addition, the red descending trendline at $3.10 will also weigh on this area as a cap. Further up, the fresh year-to-date high at $3.16 is the level to beat.
On the downside, the 200-day Simple Moving Average (SMA) acts as the first support near $2.54. Should that support area fail to hold, the next target could be the pivotal level near $2.14, with interim support by the 55-day SMA near $2.44. Further down, the biggest support comes at $2.18 with the 100-day SMA.
Natural Gas: Daily Chart
Natural Gas FAQs
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.
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.
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.