Natural Gas steadies, torn between tensions in Gaza and sluggish demand

• Natural Gas keeps its head above $2.30 after last week’s rally. 
• Markets see Europe cutting demand, while tensions in Gaza ramp up again. 
• The US Dollar index holds steady just below key level ahead of ISM Manufacturing numbers. 

Natural Gas is trading near $2.32 with some bearish and bullish elements in play, keeping Natural Gas prices rather stable. The bullish elements are coming from tensions in the Middle East, where Israeli people are starting to question the approach from Israel’s Prime Minister Benjamin Netanyahu and demand a swift ceasefire and peace deal to get hostages return safely. On the other side, bearish news comes out from Europe with Gas storages near full ahead of the next heating season and the German car industry struggling. 

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is holding on to its recovery taking place last week. Markets got wrong-footed after the Jackson Hole speech from US Federal Reserve Chairman Jerome Powell, going all in that a September rate cut might be bigger than 25 basis points. Recent US data shows that even a 25 basis points rate cut starts to get doubted, with the Nonfarm Payrolls report on Friday to be a key data point to confirm how big that September rate cut will be. 

Natural Gas is trading at $2.32 per MMBtu at the time of writing.  

Natural Gas news and market movers: Europe is closed for Gas

• Russian LNG supplier Novatek is offering LNG to ports in Europe or Asia. 
• European Gas storage facilities are over 92% filled up. However, any disruption would still be enough to see gas prices jump higher, according to Bloomberg.
• Bloomberg Economics still points to risks from Ukraine’s incursion into Russia as a tail risk for Gas prices that might jump in case Russia retaliates firmly. 
• The news out of Germany that Volkswagen will cut its production facilities might mean less demand to come from the German industry as manufacturing in Europe retreats further, Reuters reports. 

Natural Gas Technical Analysis: Both ways

Natural Gas prices are a bit torn as any upside looks limited for now. Europe has far succeeded in reaching its goal of securing enough Gas to make it through the next heating season. Meanwhile, Russia is facing pressure in its financial system with China pulling its liquidity support due to US sanctions and Ukraine’s excursion into Russia. Expect any upside in the Gas prices to remain subdued with no real substantial rallies to take place if current events remain as they are. 

Should more bullish headlines emerge and push the Gas price higher, look ahead for moving averages as upside resistances. First, the 100-day Simple Moving Average (SMA) at $2.42 would already be a significant move higher. Further up, the green ascending trend line at $2.56 could be tested. 

On the downside, very close support from the 200-day SMA at $2.29 should avoid that Gas prices fall lower.  In case that level snaps, $2.13 comes back into play for a test and possible dip below. Although still far away, a return to $2.00 or lower could mean a test at the low of August, with $1.93 in the cards. 

Natural Gas: Daily Chart