Natural Gas trades dispersed after tanker is seized in Strait of Hormuz

• Natural Gas prices are down 1% on Monday during early trading in the US. 
• The US Dollar sells off and snaps several important support levels, which should support commodity prices. 
• Natural Gas prices could decline further once $3.10 is firmly in the rear view mirror. 

Natural Gas (XNG/USD) is showing a very mixed picture this Monday morning. European futures are soaring substantially by 4%, while US futures are sinking by 2%. The reason for the dispersion appears to be headlines from a seized vessel in the Red Sea that could stir up war fears. 

Meanwhile, the US Dollar (USD) is being clobbered again as the Greenback snaps a crucial technical support level. The 200-day Simple Moving Average (SMA), visible on a daily price chart at 103.62 of the US Dollar Index (DXY), is that support level. The big risk from a pure technical perspective is that if the DXY should close below this level this evening, and open below it again on Tuesday, a long term sell-off could get underway. 

Natural Gas is trading at $3.08 per MMBtu at the time of writing.  

Natural Gas market movers: split drivers

• European Natural Gas prices are soaring substantially, near 4% intraday, after Galaxy Leader, a vessel carrying Liquefied Natural Gas (LNG), got seized by Iran-backed Houthi rebels in the Red Sea, near the Strait of Hormuz. 
• More dark clouds for Europe in the meanwhile as cold weather is coming in quickly and is already having a grip on the more northern, Scandinavian capitals. 
• US futures meanwhile are declining and putting pressure on the floor near $3.08, as recent data revealed that the Biden administration very quietly had ramped up its energy production in both Oil and Natural Gas. 
• With the Thanksgiving holiday on Thursday, markets and trading dates will be a bit distorted this week. 

Natural Gas Technical Analysis: support holds for now

Natural Gas is testing the floor at $3.07 which acts as the last line of defence in a pure technical trading environment ahead of $3.00. Although the price action in US futures looks bearish, some support could be underway as the recent seizing of a tanker in the Strait of Hormuz could respark the pricing of a risk premium in the energy complex. A possible sease-fire between Israel and Palestine could counterbalance those tensions a bit. 

Should a proxy war in the Middle East develop, $3.64, will be the level to watch for as prices soar. A risk premium will be priced in if Iran, Saudi Arabia and other countries in the region start mobilising forces. In such a case, even a quick sprint to $4.33, the high of 2023, could be expected. 

The current pivotal level, the orange line near $3.07, is trying to provide ample support for now. That level should be able to act as the last line of defence before Gas prices retreat below $3.00. If it snaps, the 100-day SMA could try and salvage the situation for Gas prices. Further weakness could see the commodity sink to $2.72 near the 200-day SMA. 

XNG/USD (Daily Chart)