Natural Gas halts rally with EU-US economies set to slow down while Biden administration considers overhaul

Natural Gas (XNG/USD) is reversing intraday just seconds after the European Central Bank (ECB) released its rate decision. Normally central banks don't have much impact on commodity prices, though in this case enough to move the needle. The reason for the sudden flip into the red for Natural Gas comes with the ECB holding rates and issuing a statement that it remains data dependant, meaning no rate cuts at hand soon. 

The US Dollar (USD) is holding ground in the US Dollar Index near 103, ahead of a big batch of data releases later this Thursday. In just a time span of around 30 minutes, the European Central Bank (ECB) will release its first rate decision for 2024, together with the release of US GDP, US Durable Goods and weekly Jobless Claims. While the Greenback is caught between two important technical elements (cap and floor), a breakout could be seen on the back of the above-mentioned catalysts. 

Natural Gas is trading at $2.27 per MMBtu at the time of writing.  

Natural Gas market movers: ECB kills goldilocks hopes

• The Biden administration is looking into putting a new process in place for approving massive natural gas export projects
• Natural Gas reverses course with hopes for a quick rate cut from the ECB dampening with its current rate decision this Thursay. This means that European economy will need to continue for another few months with heightened rates, which means a slowdown in economic growth, and thus sluggish demand for gas to persist. 
• Benchmark futures for February and March are currently trading $1 lower against the June and July contracts. This comes with traders seeing Europe heading back into the Gas markets by the summer, in order to refill Gas storages. 
• The Prime Minister of Slovakia Robert Fico said that Ukraine is open to still let Russian Gas flow beyond 2024, which would mean inflow into Austria and Italy is still guaranteed. 
• Temperatures in Europe are soaring with very mild temperatures at hand for the weekend and next week. In London even 12.5 degrees Celsius is projected, with near 20 degrees in Barcelona, which is very mild for this time of year.
• Near 15:30 GMT, the Energy Information Administration (EIA) is due to release the weekly Gas Storage Changes. Previous was a drawdown of 154 billion cubic feet of Gas. 

Natural Gas Technical Analysis: Recovery stalls

Natural Gas got oversold earlier this week, with the commodity rebounding now in a natural move. The Relative Strength Index (RSI) is heading back to more normal levels while Gas prices are off the lows. Upside looks doubtfull after the ECB rate decision to stick to higher for longer in its policy rate, shoking off the European economy and its demand for Natural Gas. 

On the upside, Natural Gas is facing quite some pivotal levels to get back to. First is the low of December 13th at $2.20 which broke on Wednesday. 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 $1.51, the low of June 2021. Further pre-Ukraine levels would come in sight as well with $1.00 up for grabs in the longer-term

XNG/USD (Daily Chart)