Natural Gas keeps retreating with more bearish elements in the mix being added daily.
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- Natural Gas keeps retreating with more bearish elements in the mix being added daily.
- Traders are pushing gas to substantial lower levels which could mean longer term low pricing.
- The US Dollar Index jumps higher with beats on estimates from PPI.
Natural Gas (XNG/USD) is trading around the lowest levels since mid-2020, around $1.65 and is facing more downward pressure. Recent US data shows that demand for Gas is now not only abating in Europe, but also in the US. The decline towards $1.50 could mean that Gas prices are heading into a region of substantially lower pricings for longer with redundancy at peak levels against tepid global demand.
The US Dollar (USD) meanwhile is advancing in the green on the back of a strong beat in numbers this Friday. The underperforming Retail Sales print from Thursday was enough to erase the red-hot inflation print from Tuesday. Traders are now sending the US Dollar Index (DXY) higher on the back of US Producer Price Index (PPI) numbers that were a big beat on all estimates and in all segmetns, ahead of University of Michigan numbers.
Natural Gas is trading at $1.65 per MMBtu at the time of writing.
Natural Gas is struggling to find any platforms to bounce off. More short term and long term issues are arising for the energy commodity with short term global growth starting to abate, which means less demand. In the longer term, the shift away from fossil fuels means less demand. So a longer-term repricing where Natural Gas might not make its way back up above $2.00 could be on the horizon, and which pushes the Relative Strength Index (RSI) in an “oversold” regime for longer.
On the upside, Natural Gas is facing some pivotal technical levels to get back to. First stop is $1.99, – the level which, when broken, saw an accelerated decline. Next is the blue line at $2.13 with the triple bottoms from 2023. In case Natural Gas sees sudden demand pick up, possibly $2.40 could come into play.
Keep an eye on $1.80, which was a pivotal level back in July 2020 and should act as a cap now. Should more supply emerge in the markets, or more weakening data globally point to even more sluggish global growth – $1.64 and $1.53 (the low of 2020) are targets to look out for.
XNG/USD (Daily Chart)
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