- Natural Gas has been on a losing streak for the ninth consecutive day.
- Gas traders are cutting prices, with Netanyahu open to a diplomatic solution.
- The US Dollar Index is also easing, with pressure mounting ahead of the Non-Farm Payrolls release.
The price of Natural Gas (XNG/USD) The stock market fell for a ninth straight day on Friday, almost matching the correction it faced in February, which was ten days long. This time, positive headlines from Israel took over as Reuters reported that Israeli Prime Minister Benjamin Netanyahu assembled a diplomatic working group that will enter into negotiations with Hamas for a ceasefire and hostage deal. Although Netanyahu was quick to see that a ceasefire deal did not mean the war was over, markets focused on the fact that talks were underway.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the Greenback against six major currencies, is also easing on Friday, for the fourth consecutive day this week. Traders are shunning the Greenback ahead of the US June Non-Farm Payrolls (NFP) release after this week’s US economic data was weaker and often missed or exceeded estimates and consensus views. The fear now is that the NFP report could be a major miss on estimates and could turn into a nightmare later on Friday, ahead of the French elections this weekend.
Natural Gas is trading at $2.37 per MMBtu at the time of writing.
Natural Gas Market News and Factors: Slow Demand
- Bloomberg published an article on Friday stating that private gas companies in China are publicly selling Liquefied Natural Gas (LNG) import slots at new terminal facilities on the open market. This means that plenty of slots are available, with importers not needing them as LNG demand is cooling rapidly.
- Takeover rumours are rife in the LNG industry as Abu Dhabi National Oil Company (ADNOC) is considering a possible bid for Australian gas supplier Santos, according to Reuters.
- With gas prices in Europe falling, volatility is also decreasing, putting options traders on the sidelines. No significant volumes are being taken in options betting on sudden increases or spikes in natural gas prices.
- The Baker Hughes US oil rig count will be released this afternoon around 17:00 GMT. The previous number was a count of 479 rigs.
Natural Gas Technical Analysis: A Little More
Natural Gas price could look interesting for some adventurous traders looking to buy the dip, although for now it would only be for the more daring. The RSI is not yet trading at or below the ‘oversold’ barrier and therefore has more room to fall. Traders will wait for the right moment to buy the dip, which could see Natural Gas prices bounce back up to $2.52 initially.
The 200-day SMA is the first force to watch on the upside near $2.52, closely followed by the 55-day SMA at $2.61. Once above, the key level near $3.08 (March 6, 2023 high) remains a key resistance after its false breakout last week, which is still 20% away.
The support level, which could mean some buying opportunities, is $2.28, the 100-day SMA that aligns with the ascending trend line since mid-February. In case that level fails to hold as support, look for the key level near $2.13, which has acted as a ceiling and floor in the past.
Natural Gas: Daily Chart
Natural Gas FAQs
Supply and demand dynamics are a key factor influencing natural gas prices, which are 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.
The main economic release that influences natural gas prices is the weekly inventory bulletin from 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, one day after the EIA publishes its weekly Oil Bulletin. Economic data from major natural gas consumers can influence supply and demand, including China, Germany and Japan. Natural gas is primarily priced and traded in US dollars, so economic releases that affect the US dollar are also factors.
The US dollar is the world’s reserve currency and most commodities, including natural gas, are quoted and traded on 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.
