Natural Gas price remains subdued despite rising geopolitical tensions

• Natural Gas tries to hold above $2.30 after severe profit taking.
• Traders are cleaning up balance sheets ahead of New Year's close.
• The US Dollar remains steady ahead of US GDP and PCE inflation data. 

Natural Gas (XNG/USD) tries to recover somewhat on Thursday after it took a nosedive move on Wednesday as  investors cashed in  the last few profits ahead of Christmas close. The upward squeeze following  rising tensions in the Red Sea  failed to post new highs, prompting investors to opt for profit taking. The firm build up in US oil stockpiles also added to the downward move.

Meanwhile, the US Dollar (USD) is continuing its consolidation. A breakout could be soon at hand, and could come from the last two big datasets from the US this year, due on Thursday and Friday.. traders brace for the third reading of US Gross Domestic Product numbers this Thursday, while Friday the Personal Consumption Expenditures (PCE) Price Index numbers are up. 

Natural Gas is trading at $2.33 per MMBtu at the time of writing.  

Natural Gas Market Movers: Can we go home now?

• Tensions remain present around the Red Sea as ships pass the region. The number of vessels has slumped  to the lowest level this year, with all big freight operators steering their fleet around Africa in a two-week-longer journey. 
• Price pressure in Natural Gas prices should remain subdued as European gas storages remain fully equipped to withstand a severe winter. 
• Around 15:30 GMT, the weekly Natural Gas Storage numbers will be released by the Energy Information Administration. The previous number was a drawdown of 55 billion cubic metres. The Forecast pencils in an 80 billion cubic metres reduction. 
• Recent weather models show a very mild period ahead for the UK, Germany and France. This means less consumption of Gas in the bloc during the Christmas period. 

Natural Gas Technical Analysis: A return to $3 isn’t in the cards

Natural Gas fell sharply on Wednesday as speculators cashed in on profits when prices soared on the back of Red Sea tensions. Although tensions are still there, positions have been reduced ahead of the Christmas holidays in a global balance sheet cleanup. Although some more upside could be in the cards, do not expect any quick return to $3 with European gas storage facilities still well-equipped and mild temperatures across Europe. 

On the upside, Natural Gas could still try to return to the purple line near $2.60 as the first hurdle. Next, the 200-day Simple Moving Average (SMA) at $2.74 will act as a resistance, which if breached will allow Gas prices to soar to $3.00 and the 100-day SMA nearby. 

With the dust settling on the Red Sea tensions and another mild front nearing Europe for Christmas, Gas prices can retreat further towards $2.20, and the low of June. Firmer support should come in near $2.10, April’s low, at the yellow supportive line. 

XNG/USD (Daily Chart)