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Natural Gas remains just above $3.00 with headwinds for gas deliveries in Europe

  • Natural Gas prices increase their rise amid rumors that Russia is moving the borders in the Baltic Sea.
  • An unforeseen outage in Norway increases concerns about refueling in Europe.
  • The US Dollar Index enters a streak of volatility with a massive data release scheduled for this Thursday.

The price of Natural Gas (XNG/USD) has added another piece to his amazing performance for this year. From the February 24 low of $1.6290, Gas prices have rallied nearly 90% to $3.08 on Wednesday. The recent rise comes after Russia said it will redraw borders in the Baltic Sea for its exclave of Kaliningrad and around some Russian islands near St. Petersburg, raising tensions for all Baltic and Scandinavian countries in the region. region with the risk that Russia could cut off and control the entrance to the Baltic Sea.

The US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, is trading higher after markets were spooked by concerns expressed by several members of the Federal Reserve in the release of the Federal Reserve Minutes. Fed. The DXY had to give up those gains after the European, and more specifically the German, Services Purchasing Managers' Index (PMI), jumped above the consensus and advanced further above 50 to 53.9. This Thursday the US PMIs and some regional indicators of Fed activity are expected.

Natural Gas is trading at $3.01 per MMBtu at the time of writing these lines.

Natural Gas News: Russia Takes Next Step in Escalation

  • Norway has reported that an unforeseen disruption at its Kollsnes Gas processing plant is causing a supply disruption of around 8.6 million cubic meters per day. The duration of the outage is uncertain, according to Gassco.
  • A recent court ruling in favor of an undisclosed European energy company, ending payments to Gazprom PJSC, could spell the end of the last flow of Russian gas to Europe. This would pose some problems for Austria, which remains dependent on this flow.
  • On Wednesday, the Russian Defense Ministry released documents saying it is willing to redraw borders in the Baltic Sea for Kaliningrad and on the high seas near St. Petersburg. The measure provoked criticism from all Scandinavian and Baltic countries in the region. With the redrawing of the borders, Russia could try to occupy the island of Gotland, near the Swedish coast, and thus control all access to the Baltic Sea region.
  • The Energy Information Administration (EIA) will publish the changes in Gas storage this week. Last week storage levels stood at 70 billion cubic feet, and this week storage levels are expected to approach 84 billion cubic feet.

Technical analysis of Natural Gas: Overheated

Natural Gas is set to become the best performer for this year in terms of returns taking into account from its lowest level to where it is trading this week. With a very crucial pivotal level ahead, the question now is whether it is not the right time to take some profits and re-enter once the pivotal level near $3.07 is broken. If recent concerns on the geopolitical front with Russia were to become reality soon, another 20% could be added towards $3.70 by the end of summer.

The $3.00 level as a big figure was easily broken on Wednesday. The fundamental level near $3.07 (March 6, 2023 high) is now in play and has already marked a new high for 2024. Higher up, there is room for a quick cross towards $3.69 if more geopolitical tensions are added.

On the downside, the 200-day SMA acts as first support near $2.53. Should this support zone not hold, the $2.14 pivot should serve as support, ahead of the 55-day and 100-day simple moving average, which are quoted at $2.11.

Natural Gas: Daily Chart

Natural Gas: Daily Chart

Source: Fx Street

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