Natural Gas rally halts just below $2.80 after Norwegian outage repricing

• Natural Gas prices shot higher on Monday after reports on Norway supply issues.
• Meanwhile the option markets show fatigue in the overextended long positioning. 
• The US Dollar Index jumps higher on Tuesday on safe-haven inflow after it sank on Monday. 

Natural Gas price (XNG/USD) trades in a narrow range around $2.80 on Tuesday after a more than 6% surge on Monday on reports that Norway was facing delivery issues in its Gas supply to Europe. Gas prices shot higher after the news amidst the refueling season for Europe ahead of next fall and winter. However, some headwinds are emerging for an extension of that rally with the options markets tilted to an overstretched long position, which might get set to become unwinded for profit-taking. 

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is facing a volatile week. The sharp fall on Monday resulted from a mixed and overall weaker data release from the Institute for Supply Management (ISM), which confirmed again that the US manufacturing activity is retreating from its peak performance. However, the DXY soars on Tuesday, bouncing off its weekly lows, with markets fleeing to risk-off mode as equity markets plunge lower.   

Natural Gas is trading at $2.78 per MMBtu at the time of writing.  

Natural Gas news and market movers: Positioning to get unwinded

• Recent futures data reveals that Hedge Funds have extended their net-long positions in European Dutch TTF Gas futures to the highest level since October, Bloomberg Intelligence reports.
• Norwegian Gas network operator Gassco reports on its website that the unplanned Nyhamna outage will be extended until at least Friday to get the processing plant back online. 
• TotalEnergies has signed two new medium- and long-term contracts for the Asian markets, amassing 1,300,000 tonnes per year of Liquefied Natural Gas (LNG), according to  news website Tank Storage. 

Natural Gas Technical Analysis: Pure technical bounce facing profit-taking

Natural Gas has pulled off a very nice technical pattern by bouncing off the 200-day Simple Moving Average (SMA), near $2.53. Although it looks tempting to stick on the trade towards $3.07, the market positioning must not be overlooked. Futures data reveals that long positions are getting too crowded, which could drive a correction with traders unwinding their positions and cashing in on their gains in the near future, while Europe is in a good position to get fully refueled ahead of the next heating season. 

The $3.00 marker as a big figure was tested in May. The pivotal level near $3.07 ( March 6, 2023, high) remains key as prices failed to post a daily close above it. Further up, the fresh year-to-date high at $3.16 is the level to beat. 

On the downside, the 200-day Simple Moving Average (SMA) acts as the first support near $2.53. Should that support area fail to hold, the next target could be the pivotal level near $2.14, with interim support by the 55-day SMA near $2.24. Further down, the biggest support comes at $2.11 with the 100-day SMA. 

Natural Gas: Daily Chart