- Natural Gas undergoes technical rejection and sees rally fading.
- India refuses to buy Russian LNG which is under US sanctions.
- The US Dollar Index eases after the Fed delivers a 50 basis point rate cut with more to come.
Natural Gas futures slide lowers while headlines this Thursday emerge that India will not buy LNG from Russia that is sanctioned by the US, Indian Oil minister Hardeep Puri confirms to Bloomberg. Meanwhile Europe is bracing for a cold spell where temperatures are set to drop below averages. On the other hand, the recent pager and walkie-talkie bombing from Hamas members by Israel is a setback for any peace deal or ceasefire in the region.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is on the back foot after the US Federal Reserve (Fed) delivered a 50 basis point (bps) interest rate cut. In its forecast, the central bank projected another 50 bps rate cut to take place by the end of 2024. Equities are having a field day on the back of this and are rallying across the globe while the Greenback is dipping lower against nearly every major currency.
Natural Gas is trading at $2.50 per MMBtu at the time of writing.
Natural Gas news and market movers: India says no to Russian gas
- Indian Oil Minister Hardeep Puri says to Bloomberg that if LNG from Russia is from a sanctioned facility, India will not buy it. This is anothe setback for the Russian Arctic LNG 2 facility which is struggling to find buyers.
- European weather will come to the forefront in the coming weeks and months, with projected temperatures quite below the normal averages, Bloomberg reports.
- Uniper CEO Michael Lewis reported that Europe is well equipped to continue without the Russian gas supply, Bloomberg reports. On December 31, Austria and Slovakia will see the Russian gas flow running through Ukraine end as the transit deal will not be renewed or prolonged.
- The International Energy Agency (IEA), meanwhile, is also planning to end Russian gas flows through Ukraine after a transit deal expires at the end of the year, Reuters reports.
- Near 14:30 GMT, the Energy Information Administration (EIA) will release the weekly Natural Gas Storage levels. A build of 53 billion cubic feet is expected for this week after the build by 40 billion cubic feet last week.
Natural Gas Technical Analysis: Looking for support
Natural Gas prices have topped out for now. The bullish elements that could drive price action higher, such as the end of the Russian gas transit supply, have been already priced in. Europe itself has secured enough gas to go through the upcoming heating season. The only wildcard remains the geopolitical tensions, which could drive Gas prices either way.
On the upside, that blue ascending trend line in the daily chart below acts as a short-term resistance, near $2.62. Should the Gas price make its way above it, a longer-term uptrend could play out here. Further up, $2.80 and $2.83 (red descending trend line) are coming into play.
On the downside, three clear levels can be identified to provide near-term and longer-term support in case prices retrace. The first is the 100-day Simple Moving Average (SMA) at $2.47. A leg lower, both the 200-day SMA and the 55-day SMA are around $2.28, just ahead of $2.13 (a pivotal level since 2023).
Natural Gas: Daily Chart
Natural Gas FAQs
Supply and demand dynamics are a key factor influencing Natural Gas prices, and are themselves influenced by global economic growth, industrial activity, population growth, production levels, and inventories. The weather impacts Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources impacts prices as consumers may switch to cheaper sources. Geopolitical events are factors as exemplified by the war in Ukraine. Government policies relating to extraction, transportation, and environmental issues also impact prices.
The main economic release influencing Natural Gas prices is the weekly inventory bulletin from the Energy Information Administration (EIA), a US government agency that produces US gas market data. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, a day after the EIA publishes its weekly Oil bulletin. Economic data from large consumers of Natural Gas can impact supply and demand, the largest of which include China, Germany and Japan. Natural Gas is primarily priced and traded in US Dollars, thus economic releases impacting the US Dollar are also factors.
The US Dollar is the world’s reserve currency and most commodities, including Natural Gas are priced and traded on international markets in US Dollars. As such, the value of the US Dollar is a factor in the price of Natural Gas, because if the Dollar strengthens it means less Dollars are required to buy the same volume of Gas (the price falls), and vice versa if USD strengthens.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.