Natural Gas retreats as geopolitical tensions ease

FXStreet
Updated Apr 22, 2024 13:11
Mitrade

  • Natural Gas price retreats on Monday on Iran’s communication. 


  • Iran'S foreign ministry said nuclear weapons have no place in Iran’s nuclear doctrine.


  • The US Dollar Index eases with markets favoring risk assets over safe havens and cash. 




Natural Gas (XNG/USD) retreats from its last week’s peaks near $2.03 after tensions were nearly spill over between Israel and Iran in a direct confrontation. However, the retaliation from Israel on Iran was mild, which already offered markets a sigh of relief on Friday when US equities almost erased an earlier 2% decline before the US opening bell. With new easing communication from Iran on Monday, investors are heading back into equities with the idea that any further escalation will not be at hand any time soon. 


Meanwhile, the US Dollar Index (DXY) is weakening on outflows out of safe havens into risk assets. Apart from geopolitics, important US macro data may influence the Greenback’s valuation, as the US Gross Domestic Product (GDP) and the US Personal Consumption Expenditures (PCE) Price Index are set to be released this week. After the hot inflation print from two weeks ago, another higher-than-expected PCE figure could trigger expectations for a rate hike, rather than an interest rate cut as the first move from the US Federal Reserve (Fed). 


Natural Gas is trading at $1.98 per MMBtu at the time of writing.  



Natural Gas news and market movers: Tail risk deflates


European Gas prices are seeing a broader correction than US Gas prices, down over 3%. as tail risks deflating quickly in the Middle East and European Gas storages still reasonably well-stocked.


Interfax reports that Swedish Foreign Minister Tobias Billström said  that the European Union plans to consider a ban on Russian Liquefied Natural Gas (LNG) imports as part of the 14th sanctions package.


BloombergNEF calculated that Europe should have its Gas storage back to 100% full by October. The report was released on Bloomberg onMonday. 


Good news comes from the US Freeport LNG plant, where operations are restarting after being offline for nearly two weeks. 



Natural Gas Technical Analysis: Expect risk to linger while easing


Natural Gas is trading in a consolidation pattern here for the coming weeks. Certainly, there is room for some easing with the summer season ahead and less demand for Gas. Meanwhile, the recent uptrend since February keeps holding and could spark up at any moment if tensions in the Middle East flare up. While Europe is restocking for the next heating season, no big sell-off is expected in Gas prices with the supportive demand throughout the summer period from Europe. 


On the upside, the blue line at $2.11, the 2023 low, is the level to watch. Next, the 100-day Simple Moving Average (SMA) at $2.12 becomes the main resistance level.

On the downside, the 55-day SMA around $1.88 should be a safety net. Below it, the green ascending trend line near $1.87 should support the ongoing rally since mid-February. If that level breaks, a dive to $1.60 and $1.53 would not be impossible. 


Natural Gas: Daily Chart

Natural Gas: Daily Chart


* 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
Natural Gas faces upside pressure as European traders prepare for next heating seasonNatural Gas (XNG/USD) prices are holding ground above $2.00 on Friday after a brief dip earlier this week. Gas prices are quickly recovering as mainland Europe is gearing up for the next heating season, with traders starting to negotiate contracts in
Author  FXStreet
Natural Gas (XNG/USD) prices are holding ground above $2.00 on Friday after a brief dip earlier this week. Gas prices are quickly recovering as mainland Europe is gearing up for the next heating season, with traders starting to negotiate contracts in
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 flat as Saudi Arabia, UAE warn markets about tensionsNatural 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.
Author  FXStreet
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.
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 steadies despite escalating Middle Eastern tensionsNatural 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
Author  FXStreet
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