Natural Gas setting sail to $1.50 with global economy slowing

• Natural Gas jumps this Thursday in an attempt to snap the losing streak. 
• Traders are sending Gas prices higher in a technical bounce. 
• The US Dollar Index eased a touch and offers a window of opportunity for Gas to recover a touch.

Natural Gas (XNG/USD) has hit a fresh low overnight by hitting $1.64, which is the low of July 20th 2020. This further decline comes with a mix of sluggish demand, bleak outlooks and overall economic growth slowing down across the globe. Meanwhile the situation in the Middle East is not disrupting the Gas flow out of the region, which means a substantial oversupply in lower-than-normal demand. 

The US Dollar (USD) is retreating a touch from its peak performance on Tuesday. Markets have digested the hot inflation report that came out with several analysts, economists and even US Federal Reserve member Austan Goolsbee commenting that this inflation report was a one off. The disinflationary path is still very much intact and cuts are set to come this year. 

Natural Gas is trading at $1.68 per MMBtu at the time of writing.  

Natural Gas market movers: EU reserves above average

• European Gas reserves are above 65%, which means the EU has less than half to restock before the next heating season kicks in.
• Turkish state energy grid-operated Botas is deepening its ties with Egyptian Natural Gas Holding Company. An agreement is on the table and will include sharing each other's infrastructure and underground storage. 
• Recent numbers out of Europe show that wind energy is starting to take over energy production from Natural Gas.

Natural Gas Technical Analysis: Not the end of the line

Natural Gas is having a breather today, being up over 1.5% in a purely technical move higher. The reason for this uptick comes with the relentless selling pressure Gas prices have been facing, which now see some profit taking by short sellers. Add the inverse correlation with the US Dollar, which is a touch softer this Thursday, and a window of opportunity is offered for Gas prices to erase a little bit of thier overall loss in February. 

On the upside, Natural Gas is facing some pivotal technical levels to get back to. First, $1.99, which saw an accelerated decline. Next is the blue line at $2.13 with the triple bottoms from 2023. In case Natural Gas sees sudden demand pick up, possibly $2.40 could come into play. 

Keep an eye on $1.80, which was a pivotal level back in July 2020 and should act as a cap now. Should US President Biden’s moratorium be lifted, together with the additional supply from Canada – which is exporting more to fill the gap from the US – $1.64 and $1.53 (low of 2020) are targets to look out for. 

XNG/USD (Daily Chart)