Natural Gas price increases despite steady flows, lower demand

• Natural Gas prices are paring back losses from Monday. 
• The US Dollar trades sideways, in the middle of October’s price range. 
• US Natural Gas prices are increasing on Middle East tensions despite  weak demand . 

Natural Gas prices are increasing by around 1% on Tuesday, paring back partial losses from Monday. The upward move  is due to the announcement that US President Joe Biden will visit Israel in a  push for a diplomatic solution amid  the escalating tensions between Israel and Palestine. Natural Gas prices also respond to the possibility of a proxy war, which is still on the cards as Iran warned on Monday that the time for talks is ending and war could be the only way out. 

Meanwhile, the US Dollar (USD) was a steady beacon on Monday in a market that saw a wild ride unfold in commodities. The energy complex performed a wild ride on several comments from Iran, Turkey and the US on the Israeli-Palestinian tensions. The US Dollar traded in a small range despite the headlines and gave way to equities to jump higher.

Natural Gas is trading at $3.45 per MMBtu at the time of writing.  

Natural Gas news and market movers

• European gas prices are dropping lower with traders on the lookout for Joe Biden’s visit to Israel on Wednesday in an effort to contain any further escalation in the region. The total price decline since last week for European Gas prices amounts to  40%. 
• The surge in American gas prices could spur a switch to fuel oil instead. 
• European Gas demand remains muted, with gas inventories filled up to 98%.
• Data from Norwegian Gas company Gassco showed gas flow towards Northern Europe and the UK are at their normal average. 
• The Suez Canal will raise transit fees by 5% to 15% for LNG and LPG carriers in the strait. 

Natural Gas Technical Analysis: Any uprising remains difficult

Natural Gas tries to pare losses from Monday, though if the European Gas prices are any guidance, more pain is to come into the American Gas prices. Some upticks might be still granted due to the fragile equilibrium in the Middle East, though a firm uptrend does not seem to be at hand. With the expected mild temperatures ahead and European and American gas storages well-equipped to face the winter, rather look for the lower levels to come into play.

With the firm peak and breakthrough out of the trend channel, it will be crucial that the upper band of that same trend channel acts as support. There aren’t any significant resistance levels except for $3.65, the peak of January 17. From there, the high of 2023 near $4.3080 comes into play.

On the downside, the trend channel needs to act as support near $3.30. In case this level breaks down again, Natural Gas prices could sink to $.3.07, with that orange line identified from the double top around mid-August. Should the drop become a broader sell-off, prices could sink below $3 toward $2.85, near the 55-day Simple Moving Average.

XNG/USD (Daily Chart)