Created
: 2024.04.17
2024.04.17 19:50
Natural Gas (XNG/USD) trades flat in a narrow range on Wednesday, digesting the overnight headlines that came out about lingering tensions in the Middle East. White House National Security Advisor Jake Sullivan said to Bloomberg that the outline of the sanctions against Iran will come in the following days and will specifically target the country's drone plan. Meanwhile, in the Middle East, Saudi Arabia's Crown Prince Mohammed Bin Salman and UAE President Mohammed Bin Zayed Al Nahyan issued a rare joint statement calling for self-restraint and pointed to the dangers of war.
Meanwhile, the US Dollar Index (DXY) is weakening after its staggering five-day winning streak. Some further easing is in the cards with a very light economic calendar ahead and markets no longer looking to force the US Federal Reserve to change its stance. US Federal Reserve Chairman Jerome Powell said on Tuesday that current inflation levels do not call for a rate cut, suggesting that interest rates will stay steady for longer until inflation comes down.
Natural Gas is trading at $1.90 per MMBtu at the time of writing.
Natural Gas prices are in a soft patch on Wednesday, for as long as no clear headlines out of Israel hit the wires on what the next steps will be on Iran. The breather should give prices some room for a small retrace, though nothing substantial. With headline risk at hand, expect the main support barriers to remain unchallenged.
On the upside, the red descending trend line at $1.99-$2.00 looks ready for another test. Should Gas prices snap above it, a quick rally to $2.11 could be seen. Not that far off, $2.15 in the form of the 100-day Simple Moving Average (SMA) becomes the main resistance level.
On the downside, the 55-day SMA around $1.88 should be a safety net. Next, the green ascending trend line near $1.83 should support the rally since mid-February. Should even that level break, a dive to $1.60 and $1.53 would not be impossible.
Natural Gas: Daily Chart
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.
Created
: 2024.04.17
Last updated
: 2024.04.17
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