Natural Gas keeps an eye on $2.00 as supply is set to fall short of demand

• Natural Gas prices are soaring towards $2.00 at the start of the week.
• Traders seem to be pricing in supply issues ahead in Europe as shortages from Egypt worsen. 
• The US Dollar Index is stuck in a ‘push and pull’ pattern with the Fed pushing against markets’ expectations for fewer rate cuts.

Natural Gas (XNG/USD) price soars higher on Tuesday after a stellar performance on Monday, trading up nearly 3% for the week. The move comes as Bloomberg forecasts a decline in Gas supply by 4% in the coming weeks as Egypt is looking to hoard gas exports to keep for its own energy consumption. With the hot season nearing in the region, air conditioning and cooling installations are draining the energy grid and are in need of more electricity, which Egypt gets partially from its Gas-burning installations. 

The DXY US Dollar Index, meanwhile, had a soft start of the week, though keeping afloat around 104.00. Markets are digesting rather positive US data that points to a healthy and steady US economy, while US Federal Reserve (Fed) officials keep pushing back against market expectations by saying that rate cuts are coming soon. This keeps traders sidelined and puts the US Dollar Index in a sideways pattern of just 3% volatility from top to bottom, for the better part of 2024. 

Natural Gas is trading at $1.98 per MMBtu at the time of writing.  

Natural Gas news and market movers: Egypt drains the market

• Bloomberg Intelligence forecasts the Gas supply side is set to drop by 4%, or 34.5 million metric tons, in the coming weeks as Egypt bans its Gas exports to use it for its own electricity needs. This coincides with the beginning of the summer season, when the demand for electricity increases to power air conditioners.
• Dow Jones reports that BP will see a higher profit for this quarter with gas and oil prices picking up. 
• Recent lower prices in European Gas markets are seeing heavy buying, pushing up prices locally and could see more chunky buying out of Asia. 

Natural Gas Technical Analysis: Demand not the issue anymore, rather supply

Natural Gas prices are soaring this week with traders seeing a change in the supply side after Bloomberg reported Egypt might end its exports over the summer. Markets are facing the possibility of lower supply for the same amount of demand, or even increased demand as the European market is under siege from Asian trading desks buying up cheap Gas contracts. This combination could lead to a significant rise in prices ahead 

On the upside, the key $1.97 level needs to be regained before challenging last week’s peak at $2.01. The next key mark is the historic pivotal point at $2.13. Should Gas prices pop up in that region, a broad area opens up with the first cap at the red descending trend line near $2.21.

On the downside, multi-year lows at $1.60 are still nearby, with $1.65 as the first line in the sand. In case of a breakdown below these levels, traders should look at $1.53 as the next supportive area. 

Natural Gas: Daily Chart