Natural Gas holds up as markets in limbo over strikes

• Natural Gas is in the green  on Thursday, putting an end to this week's decline. 
• The US Dollar strengthens as a substantial monetary shift unfolds in Western and Central Europe. 
• Natural gas price could extend upward momentum after support at $2.71 triggered a bounce. 

Natural Gas price is trying to push up after its steady three-day decline this week, with benchmark futures rising 2.7% on Thursday. Traders are in the dark on what the current situation is in Australia at Chevron’s LNG facilities. Union representatives are holding discussions on whether to delay partial strike actions by another day later this Thursday. Any headline around that might turn into a headwind (or tailwind) and send Natural Gas futures substantially higher or lower. 

Meanwhile, the US Dollar is gaining strength as it turns its summer rally into an extended one. A surprise 0.75% rate cut from the Polish central bank is a telling sign of the monetary policy divergence between the United States and the European bloc. Whereas recent economic US data confirmed good health, data out of the Eurozone and several Central European countries signals distress and an increased chance of a hard landing, forcing local central banks to start cutting interest rates quicker than expected. These moves depreciate local currencies against the Greenback. 

At the time of writing, Natural Gas is trading at $2.746 per MMBtu.  

Natural Gas news and market movers

• Another sharp drop in Russian gas flows to Europe keeps market supply very tight.
• The elevated level of gas storages in Europe remains a headwind for Natural Gas prices, head of gas and power at Trafigura Richard Holtum said during a Gastech conference in Singapore earlier this Thursday. Holtum said that both the European and global LNG markets have lost flexibility, which means prices are very receptive for sudden and violent price spikes in case of sudden hiccups or shortages caused by either unforeseen bigger demand or supply reductions. 
• A Bloomberg analyst report mentioned that China will be jacking up its demand for LNG as it will ramp up its reserves for the winter. The report also mentioned that the country might take in more stockpiles, taking advantage of the current favorable prices in Gas futures and the better-than-expected growth projections. 
• In the US, the weekly numbers from the Energy Information Administration (EIA) are due at 14:30 GMT for the Natural Gas Storage Changes. Expectations are for an increase from 32 billion cubic feet to 43 billion cubic feet. The range is for 33 as the lowest and 47 for the highest. Should the number be below 33, expect a firm squeeze higher in Natural Gas prices, where a jump above 47 will likely cause a severe downturn. 

Natural Gas Technical Analysis: bounce needs to break higher

Natural Gas is erasing this week all the gains from the previous one. Some support is coming in in the form of the 55-day Simple Moving Average (SMA), which caught the break lower on Wednesday and has been triggering a bounce. In order to confirm the bounce, the high of Wednesday needs to be broken for this turnaround to be viable. 

On the upside, $2.83 needs to be taken out in order for this bounce to gain momentum. Once this rebound materialises, look for the  the 200-day Simple Moving Average (SMA) near $2.96. In case price starts to break above there and head higher, $3 will be crucial with the high of September at stake. 

On the downside, the trend channel has done a massive job underpinning the price action. The 55-day SMA already provided support ahead of any test on the lower end of the trend channel. In case the 55-day SMA breaks, look for support near $2.65. 

XNG/USD (Daily Chart)