- The price of Natural Gas consolidates this week after a strong rebound in May.
- Egypt is importing more Gas ahead of the summer season to meet energy demand.
- The US Dollar DXY Index jumps higher on Tuesday and is on track to recoup early losses of the week.
The price of Natural Gas (XNG/USD) It is trading roughly flat around $2.70 during the European trading session on Wednesday. Price action is beginning to become volatile with market participants beginning to unwind their overextended long positions in Natural Gas through options and futures contracts. The main driver of the sell-off is the European gas storage reserve, which has exceeded 70% for the first time since last winter.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, rises for the second consecutive day of gains after falling on Monday. On the week, the DXY is still trading at a loss, ahead of ADP’s private payrolls number and the Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) data for May scheduled for Wednesday. The ADP release was already weaker both in the actual number, missing estimates, and in a downward revision from the previous month.
Natural Gas is trading at $2.69 per MMBtu at the time of writing.
News and drivers of the Natural Gas market: Europe in a good position for the winter of 2024
- As mentioned above, overall European Gas storage reserves are again above 70%, according to Bloomberg data.
- Egypt will import around 20 additional cargoes of Liquefied Natural Gas (LNG) this summer to meet energy demand during the hottest period of the year. Gas exports from Egypt remain prohibited, Reuters reports.
- According to port data, LNG demand is expected to fall in June, as both Asia and Europe will receive fewer deliveries than last month. Bloomberg Energy reports that global LNG imports will fall 3% this month compared to May data.
- Russia saw its oil and gas revenues rise 50% in May, with the company dodging current sanctions imposed by Europe, the US and other countries.
Technical Analysis of Natural Gas: Taking profits in tight ranges
Natural Gas is trading again in the middle of the range that is beginning to form between $2.60 and $2.82. This consolidation is more than welcome after the wild and steep ride in May. With some profit-taking and re-ratings underway, a further pullback could be welcome before investors start buying again.
The marker of $3.00 as a big figure was tested in May. The key level near $3.07 (March 6, 2023 high) remains crucial as prices failed to close above it in one day. Further up, the new year-to-date high at $3.16 is the level to beat.
On the downside, the 200-day SMA acts as the first support near $2.53. If that support area does not hold, the next target could be the key level near $2.14, with intermediate support by the 55-day SMA near $2.25. Further down, the major support lies at $2.11 with the 100-day SMA.
Natural Gas: Daily Chart
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.
