Natural Gas price looks set for rebound as frost grips Europe

• Natural Gas prices could return to $3 as cold season kicks in for Europe. 
• Natural Gas prices have fallen throughout November. 
• The US Dollar starts to turn after three weeks of continued weakness. 

Natural Gas (XNG/USD) prices could be turning around soon as the current drop in temperatures across Europe is suddenly eating into the Gas reserves. Although stockpiles are still comfortably full, some gas storages for certain European countries saw a quite large drawdown, of 5% to even 10%, in just a matter of a few days. This could suggest that European consumers are no longer worried about elevated energy bills as they used to against the past two years. Signs of increasing demand, coupled with steady or declining supply, tend to lift prices. 

Meanwhile, the US Dollar (USD) is still trying to claw back against the weakness it registered in November. The Greenback depreciated for a third straight week on Friday evening at the close. Markets will be on the lookout for the US Jobs Report on Friday and the last US Federal Reserve Meeting of the year next week.  

Natural Gas is trading at $2.69 per MMBtu at the time of writing.  

Natural Gas market movers: EU not saving anymore

• European Gas storage levels are seeing substantial drawdowns in stockpiles. The overall European Gas storage tracker was at 94.39% on Monday morning. Still, reserves in countries likeBelgium are at 87.44%, a  ten-percentage-point decline in stockpiles since Friday.
• Austria might be facing issues at the EU council as the country is still seeing large amounts of Russian Gas flowing into its country. Austria is even forced to sell the Gas to neighbouring countries. 
• COP28 President Sultan Al Jaber was condemned after a scandal leaked on phasing out fossil fuels. The Chief Executive Officer of the Abu Dhabi National Oil Company apparently used COP28 to have meetings to further strengthen and intensify Oil business deals.  

Natural Gas Technical Analysis: Turnaround due 

Natural Gas might have reached the end in its continuous decline throughout November. With European gas storages starting to see substantial drawdowns after just three days of negative temperatures, the question will be if these reserves are big enough to face several days in a row of freezing cold. Adding the technical angle, the Relative Strength Index (RSI) trades in oversold territory, signalling that a pickup in demand might be due.  

Meanwhile, pressure is building again in Gaza with Israeli troops advancing on several fronts, further escalating the situation. Adding this to the cold front in Europe, Natural Gas could  edge up to $3.0 as the level to watch. Just above, the 100-day Simple Moving Average (SMA) at $3.01 could throw a brief spanner in the works. Once bulls have dealt with a break above this 100-day SMA, look for $3.06 and $3.20 as next profit levels on the upside. 

With the support of the 200-day SMA gone now, a further decline will target two intermediary levels on the downside. the fIrst one is the purple line near $2.57, which triggered a bounce on August 24. In case that fails, the low of the summer near $2.48 might be strong enough to catch any falling knives, with the RSI by then severely in oversold regime. 

XNG/USD (Daily Chart)