Natural Gas jumps 4% on Monday as pressure builds on European market

• Natural Gas prices are popping back above $1.80.
• Asian Gas traders are flocking into the European market, creating an imbalance between buyers and sellers.
• The US Dollar Index trades in the mid-103.00 range ahead of two big central bank meetings.

Natural Gas prices (XNG/USD) jumped this Monday back above $1.80 as Asian traders appear to be operating again in the European Gas futures market. This creates an imbalance in the already fragile European gas market, increasing doubts over whether the old continent will be able to restock its reserves ahead of the next heating season. Although the reserves have not declined as much as expected this winter, new deals to secure refilling are not taking place and Asian traders buy up the current cheap-priced contracts. 

The US Dollar trades steady this Monday ahead of two major central bank meetings:  the Bank of Japan (BoJ) and the US Federal Reserve on Tuesday and Wednesday, respectively. The BoJ is expected to move out from its negative rate policy, which would mean the first rate hike in 17 years. Meanwhile, the Fed will need to ease the nerves of markets having pushed forward the initial rate cut to September after stickier inflation data last week. 

Natural Gas is trading at $1.86 per MMBtu at the time of writing.  

Natural Gas news and market movers: European market weak spot

• Bloomberg energy reported this Monday that Natural Gas demand in Asia has moved back to pre-pandemic levels. India is projected to even surpass its pre-pandemic demand for Gas, with more new plants set to come online in 2024-2025.
• Gas flows at the US Freeport facility in Texas are still reduced and lower production is set to remain until the end of April.
• A cold front is set to hit Europe next week, possibly reducing the continent’s reserves further. 
• Ole Sloth, head of commodity strategy at Saxo Bank, said that the recent attacks from Ukraine on Russian facilities should be factored in as a reason for higher Natural Gas prices. 

Natural Gas Technical Analysis: Another attempt to head to $2

Natural Gas prices could be seeing a perfect cocktail come to life with the European Gas market set to face some severe pressures. On the one hand, the landslide victory from Russian president Vladimir Putin will make him respond even more severely to the current Ukraine attacks on Russian Oil and Gas facilities, with measures that could disrupt the flows to Europe. Meanwhile, Asian traders are buying up currently cheap-priced Gas contracts on the European market, which could leave Europe behind with elevated prices ahead of the next heating season. 

On the upside, the key $2.00 level needs to be regained first. The next key level is the historic pivotal point at $2.12, which falls broadly in line with the 55-day Simple Moving Average (SMA) at $2.09. Should Gas prices pop up in that region, a broad area opens up with the first cap at the red descending trend line near $2.40.

On the downside, multi-year lows are nearby with $1.65 as the first line in the sand. This year’s low at $1.60 needs to be kept an eye on as well. Once a new low for the year is printed, traders should look at $1.53 as the next supportive area. 

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