Natural Gas flirts with a $2 round figure

• Natural Gas trades a touch higher after another test on the $2 marker.
• Traders are seeing new gas supply deals emerge which covers longer term Gas supply.
• The US Dollar Index flirts with a break below 104 as the Greenback fails to find nearby support.

Natural Gas (XNG/USD) is trading higher this Wednesday on a pure technical bounce after the dip on Tuesday which briefly broke below $2. The bounce looks to be rather short lived as geopolitical tensions are easing a touch with Hamas having proposed a 135-day ceasefire according to Saudi news channel Al Arabiya. The proposal is now being considered by Israel and other parties in the region. 

The US Dollar (USD) is feeling this  deescalation in geopolitical tensions with some safe haven outflows. This makes the Greenback, which is negatively correlated to Natural Gas, retreat from Monday’s highs and search for support. The 104 marker does not look that solid and could give way, seeing the US Dollar devalue just a little bit more before finding some solid support in the form of  the 200-day SMA near 103.59. As for market-moving events, no less than three US Federal Reserve members are due to speak this Wednesday. 

Natural Gas is trading at $2.01 per MMBtu at the time of writing.  

Natural Gas market movers: India a big winner

• Qatar agreed to lower its Liquified Natural Gas (LNG) prices in a longer term agreement with India. Petronet concluded the contract with the Emirate for 7.5 million tons of LNG per year for 20 years.
• The UK has concluded a deal to sell 1 million tons of LNG with Repsol, between 2025 and 2027.
• Norway’s biggest Oil and Gas company Equinor ASA, saw its profits fall in the fourth quarter due to substantially lower Gas prices on global markets. 

Natural Gas Technical Analysis: Ceasefire talks are always good

Natural Gas is trading in very difficult circumstances to stage a rally in any form or way. Beside the sluggish demand in Europe, markets are starting to consider that even the fact that ceasefire talks are ongoing in the Middle East is a good thing. Where questions on a possible deal were considered a risk and pushed gas prices up, this week signs of talks are considered a good thing with all parties still talking and trying to work out an agreement, which is negative for gas prices for now. 

On the upside, Natural Gas is facing some pivotal technical levels to get back to. First, the low of January at $2.10 needs to be reclaimed again. Next is the intermediary level near $2.48. Once that area gets hit, expect to see a test near $2.57 at the purple line.

Once the current low at $2.04 gets tested, or broken again, expect the $2.00 big figure to crack under pressure as well. The first level to look for on the downside is near $1.95 (orange level) which goes back to August 2020. Next is the red line near $1.51, the low of June 2021. 

XNG/USD (Daily Chart)