- The price of Natural Gas tries to stay above $2.00.
- Norway's gas exports rise again after unforeseen maintenance.
- The US Dollar Index is trading below 104.00, although the level remains within reach.
He Natural gas (XNG/USD) is resisting selling pressure and holding the $2.00 level on Wednesday, after achieving a new rise on Tuesday. However, gas bulls don't have much time to enjoy the recent rally as dark clouds are forming over the commodity. As politicians struggle to reach a ceasefire agreement before the Rammadam in Gaza, Norwegian gas is once again arriving in the UK and Europe following unforeseen cuts in recent weeks.
Meanwhile, the US Dollar (USD) is seeing some prepositions ahead of three eventful days ahead. This Wednesday, the president of the US Federal Reserve, Jerome Powell, heads to Capitol Hill to maintain his semiannual testimony in front of Congress. On Thursday, markets will hear from European Central Bank President Christine Lagarde following the bank's latest interest rate decision, and on Friday the US employment report will be released.
Natural Gas is trading at $2.04 per MMBtu at the time of writing.
Movements in the Natural Gas market: Risk helps natural Gas
- Europe is recording its highest gas storage levels in recent years as the heating season has ended and there is less need to refuel for the next season.
- Norwegian Gas flows to the UK and northwest Europe increase following unforeseen maintenance.
- Meanwhile, demand is rising in Asia, where coal prices have risen and gas is cheaper to produce electricity.
- Ukrainian Energy Minister German Galushchenko stated on Tuesday that expiring Russian gas supply contracts will not be extended, further reducing Russian gas inflows into Europe.
Natural Gas prices have quickly revalued the decrease in supply from the US and Qatar. Meanwhile, operators are again looking downwards as Europe confirms that it does not need as much Gas during the summer to be prepared for the next heating season. This could mean prices remain at the current level or lower.
On the bullish side, Natural Gas has broken the $1.99-$2.00 level, which has already proven to be some support. Then, the green line appears at $2.13, where the 2023 triple bottoms are located. If natural gas experiences a sudden spike in demand, $2.40 could come into play.
On the downside, $1.64 and $1.53 (the 2020 low) are targets to keep in mind. Ahead of those levels, the recently created pivotal levels at $1.86 and $1.80 should be able to provide some support and curb any downside movement.
XNG/USD (Daily Chart)
Frequently asked questions about Natural Gas
What fundamental factors determine the price of Natural Gas?
The dynamics of supply and demand is a key factor that influences Natural Gas prices, and is in turn influenced by global economic growth, industrial activity, population growth, production levels and inventories. Climate influences Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources influences prices as consumers may opt for cheaper sources. Geopolitical events, such as the war in Ukraine, also play a role. Government policies related to extraction, transportation and environmental issues also influence prices.
What are the main macroeconomic publications that influence Natural Gas Prices?
The main economic publication that influences Natural Gas prices is the weekly inventory bulletin of the Energy Information Administration (EIA), a US government agency that produces data on the gas market in the United States. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, the day after the EIA publishes its weekly Oil bulletin. The economic data of the large consumers of Natural Gas can influence supply and demand, among which China, Germany and Japan stand out. Natural gas is primarily priced and traded in US dollars, so economic releases affecting the US dollar are also factors.
How does the dollar influence Natural Gas prices?
The US dollar is the world's reserve currency and most commodities, including Natural Gas, are quoted and traded in international markets in US dollars. Therefore, the value of the Dollar influences the price of Natural Gas, since if the Dollar strengthens, fewer dollars are needed to buy the same volume of gas (the price falls), and vice versa if the dollar strengthens.
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.
