Natural Gas snaps below $2.10 on US measures to promote greener consumption.
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- Natural Gas snaps below $2.10 on US measures to promote greener consumption.
- Traders are seeing a potential big chunk of demand never returning to markets with US Gas stove measures.
- The US Dollar Index is staying put ahead of the Fed meeting Wednesday.
Natural Gas (XNG/USD) has breached the floor of 2023 at $2.10 and is now entering an area not seen since August 2020. Though the decline could be short-lived after Woodward Inc. held a conference call and mentioned a remarkable element in there on China. Demand for natural gas trucks is booming in China, with demand having increased significantly aginst last year, CEO Charles Blankenship said during a conference call.
The US Dollar (USD), which is negatively correlated to Gas prices, was trying to sprint away on Monday with a mix of safe-haven inflows after three US military people were killed over the weekend during a drone strike on a US base in Jordan. The US Defense administration was quick to issue comments that it is not looking for retaliation or expanding military action in the region. This defused the brewing risk-off sentiment and pushed the US Dollar Index (DXY) back to its near opening price from Monday in Asia.
Natural Gas is trading at $2.09 per MMBtu at the time of writing.
Natural Gas is going back in time and is currently trading near levels not seen since August 2020. Should Natural Gas start trading further below $2, it will be just a matter of time before those actual pre-Covid levels will come into play between $1.53 and $1.96. The current US moratorium is no game changer with supply still very much flowing.
On the upside, Natural Gas is facing some pivotal levels to get back to. First is the low of January at $2.09 which broke on Monday. 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 $1.96 (orange level) which goes back to August 2020. Next red line to keep an eye on is near $1.51, the low of June 2021.
XNG/USD (Daily Chart)
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