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Natural Gas retreats further with US equities sinking lower

March 16, 2024
in Business
Natural Gas retreats further with US equities sinking lower
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Natural Gas prices sliding lower again with the US session underway
Gas traders saw prices swing higher on Thursday even as the US Dollar strengthened. 
The US Dollar Index trades above 103.00 after the inflation-data hiccup.

Natural Gas prices (XNG/USD) slides lower together with US equities that are falling to fresh session’s lows. With the US session coming in, equities, commodities and bonds are facing selling pressure again as seen on Thursday. Natural Gas has no chance anymore to salvage the weekly loss and looks set to rather close back below $1.80.

The US Dollar had a field day on Thursday and saw pure safe-haven inflows. These Came on the back of a domino effect that originated with a surprise uptick in US Producer Price Index (PPI) data. That triggered fear of possibly another delay in the initial rate cut timing from the US Federal Reserve (Fed), and forced a repricing in the markets from June towards September. This helped  the DXY US Dollar Index jump on the charts, placing the USD in the green against nearly every major G20 peer. 

Natural Gas is trading at $1.78 per MMBtu at the time of writing.  

Natural Gas news and market movers: retreating

The International Energy Agency forecasted better demand for Oil, and that sentiment is spilling over as well for Natural Gas demand.
TC Energy will sell a pipeline in British Columbia to Nisga’a Nation in Canada, as part of TC’s divestment plans which would be in total worth $2.2 billion. 
European gas storages are filled up over 60% with temperatures in Europe starting to rise above 10 degrees Celsius on average per day.
Polish refiner Orlen signed an agreement to sell the country’s gas storage operator to   Gaz-System, which is the state run gas-pipeline operator.
European gas prices are heading higher due to more expensive Carbon permits while Asian traders are buying cheap gas contracts in the European futures markets. 

Natural Gas Technical Analysis: Thursday’s gains fading quick

Natural Gas prices might have staged a very solid rally on Thursday, but it looks like this won’t be enough to avoid a weekly loss. Natural Gas prices are expected to remain very sensitive on any geopolitical headline on the Red Sea, Gaza, or Ukraine. Still, the downtrend looks intact for now and more downside is set to build on Gas prices. 

On the upside, the key $2.00 level needs to be regained first. The next key level is the historic pivotal point at $2.12, which falls in line with the 55-day Simple Moving Average (SMA) at $2.13. Should Gas prices pop up in that region, a broad area opens up with the first cap at the red descending trend line near $2.40.

On the downside, multi-year lows are nearby with $1.65 as the first line in the sand. This year’s low at $1.60 needs to be kept an eye on as well. Once a new low for the year is printed, keep an eye on $1.53 as the next supportive area. 

XNG/USD: Daily Chart

XNG/USD: 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.

(This story was corrected on March 15 at 12:37 GMT to say, in the subheading, that news and market movers are for Natural Gas, not Oil.)

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

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