Natural Gas salvages earlier decline and is back at its winning streak

Natural Gas (XNG/USD) is back in the green with buyers that came in and bought the dip that took place ahead of the US data release. The earlier downturn came with recent inflation numbers out of Europe where disinflation is ongoing, though is starting to show signs of a slowing down economy. That would mean quite some substantial demand not coming back online anytime soon in Europe with Industrial Production remaining tepid for now in Europe. 

Meanwhile, the US Dollar (USD) is unable to move away from a key level at 104.00 in the US Dollar Index. The Personal Consumption Expenditures numbers fell in line and are showing that the disinflation path for the US is still in tact. Though the muted market reaction points to traders keeping their powder dry for the central bank meetings in March. 

Natural Gas is trading at $1.92 per MMBtu at the time of writing.  

Natural Gas market movers: Save the day

• LNG flows into Europe have been 16% higher than the 30-day average these past few days, according to Bloomberg.
• European gas storages are still filled up to nearly 63% as the heating season in the old continent comes to an end. 
• Freeport LNG in Texas has reported that it will need to extend its production of LNG another two weeks after issues with its Train 3 unit.
• At 15:30 GMT, the weekly Natural Gas Storage Change will be released by the Energy Information Administration. The previous number was a draw of 60 Billion cubic feet, with expectations for a larger draw of 88 Billion cubic feet for this week. 

Natural Gas Technical Analysis: Scooping up bargains in European gas market

Natural Gas prices are already pricing in the fact that more Asian trading desks and companies are trying to set foot in Europe to get their hands on substantially cheaper Gas contracts. Meanwhile, the European supply out of the US could be at risk as deliveries to Asia become more beneficial for US sellers, with Asian handlers willing to pay more for US gas than Europe is at the moment. This could soon see the scale tipping into less supply. Combined with an overcrowded demand, this could mean Gas prices soaring further above $2.

On the upside, Natural Gas is facing some pivotal technical levels to get back to. The next step is $1.99, – the level which, when broken on the way down, saw an accelerated decline. After that, the green line at $2.13 comes into view, with the triple bottoms from 2023. If Natural Gas sees a sudden demand pickup, $2.40 could come into play. 

On the downside, $1.64 and $1.53 (the low of 2020) are targets to look out for. Another leg lower could come if global growth starts to falter and there is less demand. Adding to that equation, more volume of Natural Gas from the US and Canada could quickly tip into an oversupplied market with more downside prices at hand. 

XNG/USD (Daily Chart)