Natural Gas hopes to end losing streak after NFP signals potential rate cuts from Fed.

Natural Gas prices rose sharply during Friday’s US session as traders drove prices lower – perhaps under pressure from Prime Minister Netanyahu’s promise for diplomatic solutions – sending prices lower. At the same time, pressure mounted ahead of Nonfarm Payrolls release. The US Dollar index eased slightly.

Natural Gas Price Indexes have seen gains exceeding one percent on the day, following US Nonfarm Payrolls numbers that suggest Federal Reserve cuts could occur in September. Other positive headlines emanated from Israel where Prime Minister Benjamin Netanyahu assembled a diplomatic task force which will enter negotiations with Hamas for a ceasefire and hostage deal – although markets took note that talks had begun and were ongoing rather than stopping altogether.

On Friday, the US Dollar Index (DXY), which tracks its value against six major currencies, saw further ease off as traders assessed that its fair value fell under 105.00 following this week’s Nonfarm Payrolls report; although overall numbers came in above expectations but unemployment climbed significantly and several components began to moderate as time progressed.

Natural Gas prices were at $2.40/MMBtu at time of writing.

Careful with natural gas news and market movers: Watch out for a dip

Bloomberg published on Friday an article noting how private gas companies in China sell Liquefied Natural Gas (LNG) import slots publicly through open markets for import terminal facilities that no longer need them, given how demand has diminished rapidly for LNG import slots. As Bloomberg pointed out, several slots may now become open market trading, leaving several slots up for grabs with demand declining rapidly for LNG importation slots.
Rumors swirl of an impending takeover bid from Abu Dhabi National Oil Company (ADNOC), reported by Reuters. ANOCC may make an offer to purchase Australian gas supplier Santos.
As European gas prices decline, volatility also falls off significantly and this has left options traders idle – no significant volumes are being betted on sudden surges or spikes in Natural Gas price movements.
Baker Hughes US Oil Rig Count will be released tonight around 17:00 GMT; previous count was 479 rigs.

Natural Gas Technical Analysis: Just wait and see

Natural Gas prices might offer opportunities for purchasing-the-dip strategies, although that would likely only appeal to risk takers at present. As its Relative Strength Index (RSI) still does not trade below or at or below ‘oversold’ threshold levels, traders could wait for a suitable moment and buy-in when prices slip back below $2.52 to purchase dips that might see prices rebound to around that mark initially.

On the upside, resistance lies near $2.52 with 55-day SMAs at $2.61 becoming relevant once back above pivotal level at March 6, 2023 – still roughly 20% away after its false break this past week – after having taken out 200-day and 55-day Simple Moving Averages as key resistance levels.

Support at $2.28 may offer buying opportunities; its 100-day simple moving average (SMA) has been closely aligned with an ascending trend line since mid-February. Should that level not hold as support, look out for pivotal support near $2.13 which has served both as cap and floor in previous trading.

Natural Gas: Daily Chart
Supply and demand dynamics play an influential role in Natural Gas prices, which in turn are determined by global economic activity, industrial activity, population growth, production levels and inventories. Weather plays an effectful part as more Natural Gas is used during cold winters or hot summers for heating/cooling needs than at any other time during the year; competition from alternative sources has an influence as consumers switch away from more costly sources; geopolitical events (i.e. the war in Ukraine) also impact prices as do government policies concerning extraction/transport/environmental issues/etc that all come into play to influence prices overall.

Energy Information Administration’s weekly inventory bulletin, typically released every Thursday afternoon at 14:30 GMT, has the greatest influence on Natural Gas prices. Large consumers such as China, Germany and Japan all play an influential role when it comes to supply and demand dynamics for Natural Gas; economic releases impacting US Dollar values also play a part.

The US Dollar serves as the world’s reserve currency and most commodities such as Natural Gas are priced and traded internationally using Dollars. Thus, its value plays an influential role in pricing Natural Gas; when its strength increases it means less Dollars will be needed to purchase equal volumes (thus driving prices down), while vice versa when its worth declines (leading to increases).