Natural Gas reaches one-month highs amid rumors that Ukraine could join NATO

• Natural Gas prices rise after learning that NATO is considering the idea of ​​incorporating Ukraine.
• Meanwhile, PetroChina is set to expand its LNG business.
• The US Dollar Index orbits around 104.00 awaiting US CPI numbers and FOMC minutes.

The price of Natural Gas (XNG/USD) rebounds for the fourth consecutive day, registering a rise of almost 6.5% this week. Gas prices received another boost after a Bloomberg Intelligence article reported that diplomatic circles are talking about the idea of ​​incorporating Ukraine into NATO, which would be adding oil to the fire for Russia. In addition, growing geopolitical tensions in the Middle East are supporting Gas prices, while Israel redirects its troops towards the border with Lebanon.

The US Dollar Index (DXY), meanwhile, is around 104.00 pending the release of the March Consumer Price Index (CPI), which appears crucial for the outlook for interest rates. for the rest of the year. A disinflationary data would be in line with what was communicated by the Fed. However, any surprise rebound could become a massacre for the markets, since investors could interpret that the president of the US Federal Reserve (Fed), Jerome Powell, and The broader Federal Open Market Committee (FOMC) are making the biggest policy mistake in decades. The publication of the minutes of the last Fed meeting could alleviate any extensive movement after the CPI publication this Wednesday.

Natural Gas is trading at $2.03 per MMBtu at the time of writing these lines.

News about Natural Gas: A risky bet

• Bloomberg Intelligence reported this morning in an article that the possibility of Ukraine joining NATO is being considered in diplomatic circles. Although this is only speculation, it would pose a certain risk that Russia would escalate the war in retaliation. Russia's complete cessation of its Gas deliveries to Europe or non-Eurozone countries through Ukraine could be the first of a series of steps in response if Ukraine were to join NATO.
• Yahoo Finance reports that PetroChina is willing to place orders to build more LNG vessels. This strategy fits with recent reports indicating that China is very active in the European Gas market and means its presence is here to stay.
• A headwind for Gas prices could come from Israel, which is finally considering a ceasefire in Gaza, although there is no real agreement yet. A ceasefire would ease tensions in the region and could bring Gas prices back below $2.00.

Technical Analysis of Natural Gas: 1982 Review

Natural Gas prices are rising due to two geopolitical factors. The idea that Ukraine could join NATO is a seismic shift in terms of power balances in Europe. This would force markets to reevaluate the entire energy complex, and both oil and gas would have to assume a huge risk premium for a long period of time. In the short term, any new rebound will come from the Middle East, after Israel announced the sending of troops to Lebanon under the pretext that Hezbollah is operating there, maintaining a potential risk of disruptions in Gas transit in the region.

With this rally heading into its fourth day, the next key mark on the upside is the all-time pivot point of $2.13. If Gas prices rise in that area, a wide area opens with the first stop at $2.20, near the 100-day SMA.

On the downside, the 55-day SMA around $1.89 should serve as a safety net. Next, multi-year lows at $1.60 will act as support, with $1.65 as the first line of containment. In the event of a break below these levels, investors should look at $1.53 as the next support zone.

Natural Gas: Daily Chart