- Natural Gas continues to decline and more bearish elements are added to the mix every day.
- Traders are pushing gas to substantially lower levels, which could mean low prices in the long term.
- The Dollar Index jumps higher with the surpassing of the IPP estimates.
He Natural Gas (XNG/USD) It is trading around the lowest levels since mid-2020, around $1.65, and faces further downward pressure. The latest US data shows that Gas demand is not only declining in Europe, but also in the US. The decline towards $1.50 could mean that Gas prices are heading towards a substantially higher price region. lower for longer, with redundancy at maximum levels in the face of tepid global demand.
For its part, the US dollar is advancing in the green thanks to the good figures published this Friday. Thursday's retail sales, which had been lower than expected, were enough to erase Tuesday's inflation numbers. The US Producer Price Index (PPI). The US exceeded all estimates and in all segments, ahead of the University of Michigan's figures.
Natural Gas is trading at $1.65 per MMBtu at the time of writing these lines.
Movements in the Natural Gas market: Redundant offer
- Eni has released its fourth quarter profit, which matched estimates. He reported that the profits from the Natural Gas business were enough to cover the weakness of the refining and chemicals branch.
- The Associated Press reports that an explosion has occurred in a Natural Gas pipeline in Iran, near Bakhtiari province. Iranian authorities confirmed that it was an act of sabotage.
- Even over the weekend, higher than normal temperatures are being recorded on the European continent, which limits short-term Gas extractions from storage facilities.
- European Gas tanks remain 66% full, above the 5-year average of 50% for this time of year.
Natural Gas Technical Analysis: Not even the red-hot IPP can move the needle
Natural Gas is struggling to find platforms on which to bounce. More short- and long-term issues are emerging for this energy commodity as short-term global growth is starting to slow, resulting in lower demand. In the long term, the abandonment of fossil fuels translates into lower demand. Therefore, a long-term revaluation could be on the horizon in which Natural Gas could not exceed $2.00 again, which would push the Relative Strength Index (RSI) into an “oversold” regime for longer. .
On the upside, Natural Gas faces some fundamental technical levels to rise again. The first stop is $1.99, – the level that, when broken, saw an accelerated decline. Below, the blue line at $2.13 with the 2023 triple bottom. In case Natural Gas demand suddenly rebounds, $2.40 may possibly come into play.
We must not lose sight of $1.80, which was a fundamental level in July 2020 and should now act as a limit. Should more supply emerge in the markets, or weaker global data points to even slower global growth – $1.64 and $1.53 (the 2020 low) are targets to watch.
XNG/USD (Daily Chart)
Frequently asked questions about Natural Gas
What fundamental factors determine the price of Natural Gas?
The dynamics of supply and demand is a key factor that influences Natural Gas prices, and is in turn influenced by global economic growth, industrial activity, population growth, production levels and inventories. Climate influences Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources influences prices as consumers may opt for cheaper sources. Geopolitical events, such as the war in Ukraine, also play a role. Government policies related to extraction, transportation and environmental issues also influence prices.
What are the main macroeconomic publications that influence Natural Gas Prices?
The main economic publication that influences Natural Gas prices is the weekly inventory bulletin of the Energy Information Administration (EIA), a US government agency that produces data on the gas market in the United States. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, the day after the EIA publishes its weekly Oil bulletin. The economic data of the large consumers of Natural Gas can influence supply and demand, among which China, Germany and Japan stand out. Natural gas is primarily priced and traded in US dollars, so economic releases affecting the US dollar are also factors.
How does the dollar influence Natural Gas prices?
The US dollar is the world's reserve currency and most commodities, including Natural Gas, are quoted and traded in international markets in US dollars. Therefore, the value of the Dollar influences the price of Natural Gas, since if the Dollar strengthens, fewer dollars are needed to buy the same volume of gas (the price falls), and vice versa if the dollar strengthens.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
