Created
: 2024.08.28
2024.08.28 19:30
Natural Gas is trading at $2.17 per MMBtu at the time of writing. Natural Gas prices (XNG/USD) remain in the clear range between $2.13 and $2.36 for most of August. Demand still looks bleak, with Europe and China having less demand for Liquified Natural Gas (LNG). Meanwhile, New Zealand is quickly lifting an LNG import ban and speeding up LNG projects to solve the current energy crisis.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is still trying to recover from one of its worst weeks in nearly a year last week. The US Dollar looks to have some support and even see some mild inflow again on the back of some nervousness ahead of Nvidia earnings later this Wednesday after the US closing bell. Any underperformance of the tech giant could spark a sell-off in equities and could see more US Dollar inflow.
Natural Gas is trading at $2.17 per MMBtu at the time of writing.
Natural Gas prices have eased after a rather volatile summer. With a ceasefire deal on the table for the Gaza region and Israel, combined European gas storage levels above 90% and sluggish demand in China, not many catalysts exist for gas prices to substantially surge. It looks like Gas prices will be stuck in this sideways action for some time until a new catalyst comes in to shake things up.
Should more bullish headlines emerge and pull the Gas price higher, look ahead for moving averages as upside resistances. First, the 200-day Simple Moving Average (SMA) and the 55-day SMA near $2.30 and $2.36 would already be significant moves higher. Further up, the 100-day SMA at $2.41 could be tested.
On the downside, pressure is building on $2.13 to a breakdown again. In case that level snaps, $2.00 comes back into play for a test and possible dip below. Although still far away, a return of sub-$2.00 could mean a test at the low of August, with $1.93 in the cards.
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
: 2024.08.28
Last updated
: 2024.08.28
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