Natural Gas rally starting to halt with European reserves above 70%

• Natural Gas price starts to consolidate after a sharp rally in May. 
• Egypte is importing more Gas ahead of the summer session to meet energy demand.
• The US Dollar Index jumps higher on Tuesday and is on track to recover initial weekly losses. 

Natural Gas price (XNG/USD) trades roughly flat at around $2.70 during the European trading session on Wednesday. The price action is starting to turn choppy with market participants starting to unwind their overextended long positions in Natural Gas via options and futures contracts. The main driver for the unwind is the European gas storage reserve, which has broken above 70% for the first time since last winter. 

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, moves higher for a second straight day of gains after Monday’s decline. For the week, the DXY index still trades in a loss, ahead of the ADP private payroll number and the Institute for Supply Management’s (ISM) Services Purchasing Managers Index (PMI) data for May scheduled on Wednesday. 

Natural Gas is trading at $2.68 per MMBtu at the time of writing.  

Natural Gas news and market movers: Europe is building up reserves

• As mentioned above, European overall Gas storage reserves are back above 70%, according to Bloomberg data.
• Egypt will import around 20 additional Liquefied Natural Gas (LNG) cargoes this summer to meet energy demand during the hottest period of the year. Gas Exports out of Egypt are still banned, Reuters reports. 
• According to port data, demand for LNG is set to fall in June as both Asia and Europe take fewer deliveries than last month. Bloomberg Energy reports that global LNG imports will fall by 3% this month compared to May data.

Natural Gas Technical Analysis: Time to consolidate

Natural Gas is trading back in the middle of the range that is starting to form between $2.60 and $2.82. This consolidation is more than welcome after the wild and steep ride in May. With some profit-taking and reassessments taking place, some additional retracement might be welcomed first before investors start to buy in again. 

The $3.00 marker as a big figure was tested in May. The pivotal level near $3.07 ( March 6, 2023, high) remains key as prices failed to post a daily close above it. Further up, the fresh year-to-date high at $3.16 is the level to beat. 

On the downside, the 200-day Simple Moving Average (SMA) acts as the first support near $2.53. Should that support area fail to hold, the next target could be the pivotal level near $2.14, with interim support by the 55-day SMA near $2.25. Further down, the biggest support comes at $2.11 with the 100-day SMA. 

Natural Gas: Daily Chart