Natural Gas breaks higher as strikes in Australia push European prices up more than 10%

• Rupture of the price of Natural Gas after the failure of negotiations between Chevron and the Australian unions.
• The Dollar will close with weekly gains, in what is almost its best week of 2023.
• The price of Natural Gas could extend the recovery and reach $2.95.

Natural Gas prices are heading higher at the beginning of the American session. Strikes at Australian ports are inevitable and could end up causing a reduction in supply on world markets. The Australian country represents 10% of the world’s supply of liquefied natural gas (LNG), so an interruption of the country’s gas flows could cause a sharp drop in gas prices if supply is not able to cope or replace the missing 10% in the short term.

At the time of writing these lines, Natural Gas is trading at $2.85 per MMBtu.

News about Natural Gas and market engines

• European Gas futures, more sensitive to supply problems, rise 15% thanks to the news from Australia.
• The Gorgon and Wheatstone facilities will be closed from 05:00 GMT. These two plants alone represent 7% of the world’s supply.
• The stoppages will be brief and there will be no overtime. If an agreement is not reached before September 14, the plants will stop completely for two weeks.
• This action is the culmination of several weeks of discussions that kept the markets in suspense. According to sources from both Chevron and the unions, several key issues remain to be discussed.
• In a statement on Facebook, the Offshore Alliance union said: “Chevron’s negotiating performance has been the most inept effort of any employer the union has dealt with in the last five years and our members are fed up.”
• Baker Hughes’ US rig count data could get a little more attention to see if the US can supply itself sufficiently when it comes to LNG production.

Natural Gas Technical Analysis: Finally some movement

Natural Gas is breaking out and is already trading above the highs recorded on Wednesday and Thursday. After weeks of nervous communication, traders can finally turn to more binary trading setups as the risk of a complete shutdown is just days away. With the clock ticking, Gas prices are expected to rise as the risk of lower supply increases.

On the bullish side, for this rebound to gain momentum it is necessary to exceed $2.83. Once this bounce materializes, look for the 200-day SMA near $2.95. Should the price start to break above that level and head higher, $3 will be crucial with the September high in play.

To the downside, the trend channel has done a great job of propping up the price action. The 55-day SMA has already provided support ahead of any test at the lower end of the trend channel. In case of a break of the 55-day SMA, support can be sought near $2.65.

XNG/USD Daily chart