Natural Gas Stalls Before $3 as Demand Moderates

• Natural Gas could fall as demand remains tepid and reserves high.
• US dollar pulls back on weak US data ahead of jobs report.
• Gas price is expected to be sideways or downward, as supply begins to accumulate with lower demand.

Natural Gas could be pulling back from the highs reached in the last few days due to concerns about a possible shutdown of LNG exports from Australia to the rest of the world. As the week progressed, another local exporter managed to reach an agreement and avoid further strikes. This opens the door for Chevron to reach an agreement as well, which would mean that any supply problems will be limited for the foreseeable future.

Meanwhile, demand remains stable or low, as the European bloc is well ahead of its target for this winter to fill strategic gas storages. The European bloc has committed to dispense with Russia’s fossil fuels by 2027. Yet EU countries have bought a record 52% of all cubic meters of LNG Russia has exported this year.

At the time of writing these lines, Natural Gas is trading at $2.926 per MMBtu.

News about Natural Gas and market movements

The Energy Information Administration (EIA) will publish weekly natural gas storage changes for this week at 14:30 GMT. According to the latest headlines, a new build of 18 to 29 billion cubic feet is expected.
Oman LNG has signed a new agreement with Shell and OQ for the supply of LNG.
PetroChina’s trading profits have soared as the company expanded its role in the global gas market and Chinese companies were able to enjoy the discounted price of Russian crude.
Chinese LNG consumption in July has increased by 9.6% year-on-year.
The recent series of weaker data coming out of the US, with a lower than expected US Gross Domestic Product and a substantial decline in JOLTS job openings in the US, could point to lower demand for LNG in the coming quarters.
European gas storage stands at 93% and this week there has been a new increase in reserves.
Australian local exporter Woodside Energy Group Limited has reached an important agreement with the unions. This could mean that Chevron also reaches an agreement soon, thus easing any potential strikes in early September.
Tropical Storm Idalia is heading toward Georgia as it weakens to a Category 1 hurricane.
All eyes remain on Friday’s US jobs report.
Natural Gas Technical Analysis: Rally Stalls With $3 In Sight
Natural Gas has been on a roll this week and is starting to face some headwinds. With demand no longer picking up and supply possibly not being as tight as originally anticipated, a small rebalancing in gas prices could occur. Profit taking is to be expected on the rally this week, which means that the $3 level looks unreachable.

To the upside, $3 remains the level to watch once Natural Gas prices can recover to $2.9. If prices recover, we will have to wait for a close above $2,935, the maximum of August 15, to confirm that demand is picking up again. Further upside towards $3 and $3,065 (August 9 high) would be targets or levels to watch.

To the downside, the trend channel has done a great job of propping up the price action. Aside from a small false breakout, ample support was provided near $2.60. The 55-day SMA has to provide that much-needed support at $2.69 before the uptrending channel at $2.61. Any knives that fall can still be caught by the 100-day SMA near $2.55.

XNG/USD (Daily Chart)