Mitrade Insights is dedicated to providing investors with rich, timely and most valuable financial information to help investors grasp the market situation and find timely trading opportunities.
    2021
    Best News & Analysis Provider
    FxDailyInfo
    2022
    Best Forex Educational Resources Global
    International Business Magazine

    Natural Gas steadies despite escalating Middle Eastern tensions

    FXStreet
    Updated January 19, 2024 24:23
    Mitrade

    • Natural Gas trades in a tight range around $2.50.


    • Traders see short-term reasons for sending Gas futures higher.


    • The US Dollar Index remains steady in the mid-103.00 area after a failed close overnight.



    Natural Gas (XNG/USD) is off the lows after its steep decline throughout this week. Although supply is still very much solid and flowing, there are a few elements that are starting to worry traders. The biggest factor is the escalation of tensions in Yemen, with more strikes in the Red Sea, and Iran attacking Pakistan. 


    Meanwhile, the US Dollar (USD) is playing with fire after the Greenback has been on a tear all week. In the late hours of the US closing bell on Wednesday, the US Dollar Index (DXY) retreated and failed to hold ground above two important technical supports. This means that the lifecycle of this recent US Dollar strength could be short-lived. 


    Natural Gas is trading at $2.51 per MMBtu at the time of writing.  



    Natural Gas market movers: Worries on the summer for Europe


    ●Frost in Texas and Louisiana is making it impossible to load US Liquified Natural Gas (LNG) onto carriers. This means some delay in deliveries in the short term even as warmer weather is expected to come in next week .


    ●Europe looks well equipped to get through the winter for this year. However, not many deals have been put on the table to get Gas in over the summer to get ready for the next winter. The longer this takes, the bigger the risk of  a shortfall for next year.


    ●The situation in the Red Sea is entering a next level of heightened tensions with more attacks reported  by US and UK forces in Yemen against Houthi rebels.


    ●Next to that, Iran has sent several high members of its civil guard to Yemen to stand with the Houthi rebels while Iran itself has performed attacks against Pakistan. 


    ●At 15:30 GMT, the Energy Information Administration will release the weekly Gas Storage changes. Expectations are for a drawdown from 140 billion cubic metres to a drawdown of 164 billion cubic metres. 



    Natural Gas Technical Analysis: A bit too low


    Natural Gas is trying to salvage a touch from its steep decline earlier this week. Seeing the above bullet points, the current level near $2.50 might be a bit too cheap. A risk premium to be added makes sense and could still come overtime, with a fair value seen near $2.70.


    On the upside, Natural Gas is facing all the important Simple Moving Averages (SMA) as resistance levels. First up, nearby is the 200-day SMA near $2.75. Next up is the 55-day SMA at $2.85. Last but not least,  the 100-day SMA is at $2.95, near $3.


    The ascending trend line broke earlier this week and already triggered firm rejection on Wednesday at the top side. Support near $2.47 is held for now. In case Gas prices fall further, expect to see a full swing decline towards $2.20 and test the low of December.


    XNG/USD (Daily Chart)

    XNG/USD (Daily Chart), Source: FXSTREET.


    * The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

    Do you find this article useful?
    Related Articles
    placeholder
    Energos Infrastructure Announces Transformative Marine LNG Asset Transaction with Long Term Charter Contracts in GermanyEnergos announced the completion of the acquisition of two state-of-the-art floating storage and regasification units (“FSRUs”) from an associated company of Dynagas.
    Author  PR Newswire
    Energos announced the completion of the acquisition of two state-of-the-art floating storage and regasification units (“FSRUs”) from an associated company of Dynagas.
    placeholder
    Natural Gas Futures: Further weakness likelyWith both open interest and volume rising, further bearish trades are likely to emerge in the near term, with $2.600 being the next target.
    Author  FXStreet
    With both open interest and volume rising, further bearish trades are likely to emerge in the near term, with $2.600 being the next target.
    placeholder
    Natural Gas bounces after selling regime takes a breatherNatural Gas (XNG/USD) is jumping back above $1.65 and is trying another attempt to snap its losing streak. The countermove gets a bit of help from the US Dollar which is retreating a touch just hours before the US opening bell. Selling pressure
    Author  FXStreet
    Natural Gas (XNG/USD) is jumping back above $1.65 and is trying another attempt to snap its losing streak. The countermove gets a bit of help from the US Dollar which is retreating a touch just hours before the US opening bell. Selling pressure
    placeholder
    Natural Gas jumps 7% on major shale driller cutting outputNatural Gas (XNG/USD) is jumping back to $1.80 in a steep rally which is mainly headline driven. One of the major Shale drillers, Chesapeake, is planning to cut its Natural Gas production already in 2024. The recent crash in Gas prices makes its
    Author  FXStreet
    Natural Gas (XNG/USD) is jumping back to $1.80 in a steep rally which is mainly headline driven. One of the major Shale drillers, Chesapeake, is planning to cut its Natural Gas production already in 2024. The recent crash in Gas prices makes its