Natural Gas Price Analysis: Approaches two-year low at $2.10 despite a less-than-expected drawdown

Natural Gas is oscillating near its fresh two-year low at $2.09 amid a weak demand outlook.
The US EIA reported a drawdown in natural gas inventory by 47 billion cubic feet (bcf), lower than the consensus of -54bcf.
The extension of winter in northern America has postponed the requirement of ACs due to which demand for natural gas might remain weak.

Sagar Dua FXStreet

Natural Gas futures are hovering near their fresh two-year low at $2.09 in the Asian session. The asset witnessed a steep fall on Thursday despite a less-than-anticipated drawdown reported by the United States Energy Information Administration (EIA) for the week ending March 24.

The US EIA reported a drawdown in natural gas inventory by 47 billion cubic feet (bcf), lower than the consensus of -54bcf and the former release of 72bcf. The extension of winter in northern America has postponed the requirement for air conditioners to which demand for natural gas is expected to remain weak, which is weighing heavily on natural gas prices. Also, declining oil prices will get benefit from natural gas substitution ahead.

Meanwhile, the US Dollar Index (DXY) is displaying a subdued performance ahead of the United States core Personal Consumption Expenditure (PCE) Price Index data.

Natural Gas price weekly chart

On a weekly scale, Natural Gas futures are showing signs of volatility divergence. The asset has gone a little far from the lower Bollinger Bands (20,2), which indicates that volatility has been squeezed. Also, the Relative Strength Index (RSI) (14) is displaying a divergence in the downside momentum.

The asset has formed a lower low while the momentum oscillator has not made a lower low yet. However, investors are required to use more filters for building bullish bias.

Natural Gas price hourly chart

On an hourly scale, Natural Gas futures have shown some signs of responsive buying near the critical support of $2.11, which could result in a Double Bottom chart pattern but still eyes more filters for confidence.

For an upside move, the asset needs to break above the immediate resistance of $2.20, which will drive the asset towards March 28 high around $2.25 followed by March 27 high at $2.29.

On the flip side, a break below March 30 low at $2.09 would expose the asset to fresh two-year low near the psychological resistance at $2.00.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

EUR/USD flatlines above 1.1500, awaits US jobs data

EUR/USD holds steady around 1.1505 in European trading hours on Tuesday. Markets remain cautious ahead of a slew of US jobs data, starting with the JOLTS Job Openings Survey later today. However, the downside appears capped by hot Eurozone inflation in July, bolstering the case for a European Central Bank rate hike at the next meeting.

Gold consolidates above $4,050 amid Fed hike bets and Iran uncertainty

Gold seesaws between tepid gains and minor losses during the Asian session as traders seem hesitant and opt to wait for further developments surrounding the Middle East crisis. The US Dollar struggles to build on the previous day's solid bounce from the lowest level since Mid-June and acts as a tailwind for the bullion. However, the uncertainty over US-Iran peace talks helps limit the downside for the buck.

Ripple and Stellar steady as derivatives data points to easing downside pressure

Ripple and Stellar show mixed price action, with XRP holding above the key $1 support zone while XLM faces rejection at $0.173. Meanwhile, improving derivatives metrics alongside fading bearish momentum suggest that the downside pressure may be easing for both altcoins. Derivatives data shows mild bullish sentiment among traders.

US JOLTs report in focus

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.