- On Wednesday, the price of natural gas does not change, but futures on European markets do.
- On the eve of Israel’s potential response against Iran, markets predict that tensions will persist.
- Following Fed Chairman Powell’s confirmation of a pause in interest rate reductions, the US Dollar Index steadies.
Wednesday’s trade in natural gas (XNG/USD) is sideways and almost flat as it processes the news from the previous night regarding ongoing hostilities in the Middle East. According to White House National Security Advisor Jake Sullivan, the details of the impending penalties against Iran would be revealed in the coming days, with a particular focus on the nation’s drone program. In the meantime, the president of the United Arab Emirates, Mohammed Bin Zayed Al Nahyan, and the crown prince of Saudi Arabia, Mohammed Bin Salman, released a rare joint statement in which they warned against conflict and urged self-control.
The US Dollar Index (DXY), however, is losing ground following its incredible five-day gaining run. With a relatively light economic calendar ahead of us and markets no longer trying to pressure the US Federal Reserve to shift course, some additional easing is likely. Chairman of the US Federal Reserve Jerome Powell stated on Tuesday that there is no need to lower interest rates at the current pace of inflation, implying that they will remain unchanged for a longer period of time until inflation declines.
As of this writing, natural gas is trading for $1.90 per MMBtu.
Natural Gas news and market movers: Headlines not there
There is an unforeseen maintenance call at the UK’s Barrow North LNG terminal. In the meantime, gas flows from Norway to Europe are returning to normal following a string of unplanned disruptions at several of its principal fields.
In just five days, local European Gas Futures had increased by 20%. However, once Norwegian flows return to normal volumes, prices should ease. As of right now, the Relative Strength Index (RSI) has entered an overbought region, signaling the end of the advance.
Gas storages in Europe are 62% full and will be replenished during the summer. Wednesday’s headline risks remain uncertain as investors wait for further information regarding Israel’s military actions against Iran. Bloomberg reports that the US Rockies Natural Gas Production has decreased by over 2.6%.
Natural Gas Technical Analysis: Thin equilibrium
As long as there are no certain news reports from Israel regarding the future course of action with Iran, natural gas prices will remain low on Wednesday. Prices should have some room for a slight retreat after the breather, but nothing significant. The headline risk means that the primary hurdles to support will probably not be challenged.
The red descending trend line at $1.99–$2.00 is prepared for another test on the upside. If gas prices suddenly rise above it, a brief increase to $2.11 might be observed. The 100-day Simple Moving Average (SMA) around $2.15 becomes the primary resistance level in not too far off future.
The 55-day SMA around $1.88 ought to act as a safety net on the downside. The next support for the increase since mid-February could come from the green ascending trend line around $1.83. It wouldn’t be inconceivable for there to be a drop to $1.60 or $1.53 should even that level break.
