Natural Gas sees summer futures shoot higher with traders looking for profit – Crypto News – Crypto News
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XNG/USD trades above 23.6% Fibo., bullish potential intact XNG/USD trades above 23.6% Fibo., bullish potential intact

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Natural Gas sees summer futures shoot higher with traders looking for profit – Crypto News

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  • Natural Gas marches higher in a bounce off the $2.10 barrier.
  • Traders are focussing on summer futures contracts to salvage the lost first quarter.
  • The US Dollar Index is steady ahead of ECB, US GDP, Durable Goods and Jobless Claims.

Natural Gas (XNG/USD) has sunk to a substantial low earlier this week near $2.10. Meanwhile the course has reversed within the futures markets, with summer expiries trading over $1 higher against the more near-term expiries. This means that for Europe it is cheaper to buy Gas now than in four to six months, when it would normally refill up its gas storages. This is making Gas traders scramble to still make a buck after the lacklustre to negative performance in the first weeks of 2024. 

The US Dollar (USD) is holding ground in the US Dollar Index near 103, ahead of a big batch of data releases later this Thursday. In just a time span of around 30 minutes, the European Central Bank (ECB) will release its first rate decision for 2024, together with the release of US GDP, US Durable Goods and weekly Jobless Claims. While the Greenback is caught between two important technical elements (cap and floor), a breakout could be seen on the back of the above-mentioned catalysts. 

Natural Gas is trading at $2.30 per MMBtu at the time of writing.  

Natural Gas market movers: Traders looking forward for profit

  • Benchmark futures for February and March are currently trading $1 lower against the June and July contracts. This comes with traders seeing Europe heading back into the Gas markets by the summer, in order to refill Gas storages. 
  • The Prime Minister of Slovakia Robert Fico said that Ukraine is open to still let Russian Gas flow beyond 2024, which would mean inflow into Austria and Italy is still guaranteed. 
  • Temperatures in Europe are soaring with very mild temperatures at hand for the weekend and next week. In London even 12.5 degrees Celsius is projected, with near 20 degrees in Barcelona, which is very mild for this time of year.
  • Near 15:30 GMT, the Energy Information Administration (EIA) is due to release the weekly Gas Storage Changes. Previous was a drawdown of 154 billion cubic feet of Gas. 

Natural Gas Technical Analysis: Recovery makes sense

Natural Gas got oversold earlier this week, with the commodity rebounding now in a natural move. The Relative Strength Index (RSI) is heading back to more normal levels while Gas prices are off the lows. More upside looks granted, though do not expect any exaggerated moves seeing the overall tepid outlook for 2024 in terms of global growth and economic strength. 

On the upside, Natural Gas is facing quite some pivotal levels to get back to. First is the low of December 13th at $2.20 which broke on Wednesday. Next is the intermediary level near $2.48. Once that area gets hit, expect to see a test near $2.57 at the purple line.

A break below the yellow line at $2.10 means big issues for Natural Gas, with a fresh multi-year low. First level to look for on the downside is near $1.51, the low of June 2021. Further pre-Ukraine levels would come in sight as well with $1.00 up for grabs in the longer-term

XNG/USD (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.

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