Natural Gas pressures support as Australian strike risk escalates

• Natural Gas is turning red at the start of the US trading session on Thursday.
• The US Dollar strengthens as a substantial monetary shift unfolds in Western and Central Europe. 
• Natural gas in US slips was European Gas Futures erase an earlier 7% gain. 

Earlier this Thursday some divergence in the Natural Gas Futures pricing was going on where the European Futures are rallying near 7%, while the American NatGas Futures were hardly getting off the ground. Meanwhile all gains have been erased and start to tick lower on the back of some negative comments from Chevron on the Australian situation. With strikes being delayed, the moment of truth is nearing fast. 

Meanwhile, the US Dollar is gaining strength as it turns its summer rally into an extended one. A surprise 0.75% rate cut from the Polish central bank is a telling sign of the monetary policy divergence between the United States and the European bloc. Whereas recent economic US data confirmed good health, data out of the Eurozone and several Central European countries signals distress and an increased chance of a hard landing, forcing local central banks to start cutting interest rates quicker than expected. These moves depreciate local currencies against the Greenback. 

At the time of writing, Natural Gas is trading at $2.73 per MMBtu.  

Natural Gas news and market movers

• Chevron has just issued a statement saying that it is continuing to work through the bargaining process and that any LNG strikes are delayed until 1PM Friday. 
• The reopening of the Norwegian Troll field is being delayed once more toward September 13th at the earliest. 
• Japan is nearing a deal with Qatar over deliveries of LNG. Jera Co. would be concluding the details over a long-term LNG gas purchase deal, after a two-year hiatus of dealing with the Middle-East.  
• Another sharp drop in Russian gas flows to Europe keeps market supply very tight.
• The elevated level of gas storages in Europe remains a headwind for Natural Gas prices, head of gas and power at Trafigura Richard Holtum said during a Gastech conference in Singapore earlier this Thursday. Holtum said that both the European and global LNG markets have lost flexibility, which means prices are very receptive for sudden and violent price spikes in case of sudden hiccups or shortages caused by either unforeseen bigger demand or supply reductions. 
• A Bloomberg analyst report mentioned that China will be jacking up its demand for LNG as it will ramp up its reserves for the winter. The report also mentioned that the country might take in more stockpiles, taking advantage of the current favorable prices in Gas futures and the better-than-expected growth projections. 
• In the US, the weekly numbers from the Energy Information Administration (EIA) are due at 14:30 GMT for the Natural Gas Storage Changes. Expectations are for an increase from 32 billion cubic feet to 43 billion cubic feet. The range is for 33 as the lowest and 47 for the highest. Should the number be below 33, expect a firm squeeze higher in Natural Gas prices, where a jump above 47 will likely cause a severe downturn. 

Natural Gas Technical Analysis: Stand still 

Natural Gas is erasing this week all the gains from the previous one. Some support is coming in in the form of the 55-day Simple Moving Average (SMA), which caught the break lower on Wednesday and has been triggering a bounce. In order to confirm the bounce, the high of Wednesday needs to be broken for this turnaround to be viable. 

On the upside, $2.83 needs to be taken out in order for this bounce to gain momentum. Once this rebound materialises, look for the  the 200-day Simple Moving Average (SMA) near $2.96. In case price starts to break above there and head higher, $3 will be crucial with the high of September at stake. 

On the downside, the trend channel has done a massive job underpinning the price action. The 55-day SMA already provided support ahead of any test on the lower end of the trend channel. In case the 55-day SMA breaks, look for support near $2.65. 

XNG/USD (Daily Chart)