Natural Gas remains stable as reports indicate that Europe will end the winter with little Gas

• Natural Gas prices fall again in November, as a cessation of hostilities in Gaza is expected.
• The Dollar is trading in the red again this week, erasing Wednesday’s gains.
• Natural Gas could drop to $2.70 in the worst case.

He Natural Gas (XNG/USD) sinks this week, as the agreement to cease hostilities in Gaza implies a lower risk of supply problems in the Middle East for crude oil and natural gas. Meanwhile, frost is making an appearance on the European continent, although gas deposits remain full at historically high levels and are expected to end the winter at around 50%. Although the cessation of hostilities in Gaza was delayed by a day to Friday, markets remain confident that the agreement could be the beginning of a long-term easing of tensions in the region.

Meanwhile, the US Dollar (USD) lost the brief resurgence seen on Wednesday. Throughout the day, the Dollar was in good shape to turn this week in its favor. However, the Dollar lost its intraday gains near the US closing bell. With the US market closed for Thanksgiving, little counterbalance is expected in the US trading session, which means the dollar could weaken a little more.

Natural Gas is trading at $3.04 per MMBtu at the time of writing these lines.

Movements in the Natural Gas market: US closed for business

• Bloomberg Intelligence estimated that Europe could end the cold season with reserves still close to 45%, which would mitigate any need for pre-winter support.
• Malaysian energy group Petronas had to delay several LNG shipments to its customers for December. The cause of the delay is due to production issues at its export facilities in Malaysia.
• The latest reports show that flows from Norway to Europe and the United Kingdom are above the five-day average, according to Gassco. Global LNG inflow to Western Europe is in line with the 30-day average.
• Although temperatures in several parts of Europe are beginning to approach 0° Celsius, European Gas storage remains at high levels, almost full.
• Several operators report that demand for offshore LNG storage is soaring as European underground storage is full.

Technical Analysis of Natural Gas: No headlines for now

Natural Gas is playing a dangerous game of chart chicken as the price action is below the fundamental level of $3.06, which falls in line with the double top of August 8 and 9. Pressure is on the 100-day SMA, which could give way and drop prices to $2.72 before finding the 200-day SMA as support.

Even if an agreement to cease hostilities in Gaza comes into play, the possibility of an escalation of violence leading to a proxy war cannot be ruled out. In this scenario, Natural Gas would rise, with $3.20 as a level to watch. Just above, the 55-day SMA at $3.23 could provide a brief hurdle. Once the bulls have broken the 55-day SMA, we will have to wait for $3.50 as another short-term resistance barrier.

The current pivot level, marked with an orange line near $3.07, is becoming a boundary and should exert more downward pressure. The 100-day SMA was already broken on Wednesday, although it was able to save the situation with a bounce. Once the 100-day SMA is broken at $3, pressure is expected to build at the lower end of that long-term trend channel, aligned near $2.95. Once broken, it becomes an open path towards $2.72 before meeting the 200-day SMA as the last support.

XNG/USD (Daily Chart)