Natural Gas juggles around $2.30 ahead of OPEC’s meet and US Employment Change

• Natural Gas price is oscillating in a narrow range around $2.32 as investors are awaiting the OPEC’s meeting outcome.
• The impact of cutting production further by OPEC+ members could be nullified as Russia is not committed to keeping pledge anymore.
• The US EIA has been reporting a build-up in gas storage for the past two weeks.

Natural Gas price (XNG/USD) has turned sideways after correcting marginally from $2.34 in the Asian session. The energy instrument delivered a solid recovery from the crucial support of $2.28 to provide a level ground to investors ahead of OPEC’s meeting.  

Scheduled meeting of OPEC on June 04 is expected to be heated among OPEC members and Russian leaders. Tensions between Russia and Saudi Arabia have remained higher as the former is consistently pumping cheaper oil in the global economy, undermining efforts made by the latter to bolster energy prices.

The impact of cutting overall production further by OPEC+ members excluding Russia could be nullified as Russia is not committed to keeping pledge anymore. This all could get things back to square and the oil price would remain determined by the demand catalyst only.

Investors should note that oil and natural gas are close substitutes and a steady or weak oil price could impact demand for natural gas significantly.

Apart from that, higher expectations of one more interest rate hike by the Federal Reserve (Fed) are expected to make a dent in the overall demand and could propel fears of recession, which would impact more on natural gas prices. Investors would get more clarity about Fed’s interest rate stance after the release of the United States Automatic Data Processing (ADP) Employment Change data.

Investors should note that the overall market is oversupplied with natural gas. The United States Energy Information Administration (EIA) has been reporting a build-up in gas storage for the past two weeks, indicating sluggish demand due to bleak economic outlook.