Natural Gas has been facing a losing streak for the seventh consecutive day, with prices continuing to drop. The reason behind this decline is the fact that European gas storages are filling up rapidly, despite an increase in energy demand. This situation indicates that Europe is likely to enter the next heating season with an abundance of gas supply, ensuring that there will be enough to last through the winter.
On the other hand, the US Dollar Index, which measures the value of the Greenback against six major currencies, has eased following comments from US Federal Reserve Bank officials advocating for rate cuts. This change in stance comes after weeks of signaling that interest rates should remain steady for a longer period.
As of the time of writing, Natural Gas is trading at $2.44 per MMBtu. The technical analysis shows that the price has broken below the important 200-day Simple Moving Average (SMA) support near $2.53, and is now trading below $2.50. There is room for prices to drop further, with the next target being the pivotal level near $2.13. On the upside, if the price manages to climb back above $2.53, the key resistance level near $3.08 will be the next target.
In terms of market movers and news related to Natural Gas, Norwegian Gas operator GASSCO has reported that gas flows from Norway into Europe are above their 5-day average volume. Additionally, investments funds are showing interest in European gas futures, with bullish bets on potential supply disruptions that could create an imbalance in the market.
It’s essential to understand that supply and demand dynamics, global economic growth, industrial activity, and geopolitical events all play a significant role in influencing Natural Gas prices. Factors like weather conditions, competition from other energy sources, and government policies also impact prices. The weekly inventory bulletin from the Energy Information Administration (EIA) is a crucial economic release that affects Natural Gas prices, along with data from major consumers like China, Germany, and Japan.
Overall, Natural Gas prices are currently facing downward pressure due to the filling of European gas storages and the easing of the US Dollar Index. Investors and traders need to closely monitor these factors to make informed decisions regarding their investments in Natural Gas.