Natural Gas drops over 1% in Monday trading on spring temperatures

• Natural Gas slides over 1% in early Monday trading. 
• Traders are sending Gas prices lower with temperatures hitting higher-than-normal levels in Europe. 
• The US Dollar Index is steady ahead of US CPI numbers on Tuesday. 

Natural Gas (XNG/USD) is eking out more losses at the start of this week with the weather man as the biggest catalyst for this steep decline on this occasion. A warm front is set to kick in in Europe. Temperatures are forecast to top 17 degrees Celcius in Paris for example, which is exceptional for this time of year. For 2024, this puts the Gas reserves in Europe at a very good position ahead of the next heating season with less need to acquire supply during the coming six months. 

The US Dollar (USD) is facing some pressure from all angles. Geopolitical tensions are present, favouring the Greenback on the one hand. While on the other hand traders are looking forward to the US Consumer Price Index (CPI) on Tuesday with US inflation expected to continue its disinflationary pathway lower, which advocates for a bit weaker US Dollar.  

Natural Gas is trading at $1.85 per MMBtu at the time of writing.  

Natural Gas market movers: All about the weather

• Extreme warm and mild temperatures are preserving current Gas storage levels in Europe. This puts Europe in a good position to restock for next winter. 
• MidOcean Energy acquires 20% of stake in Peru LNG in search of supply towards growth market India.
• Gas futures are seeing the more forward contracts (over summer) showing bearish signs as well, with buyers not buying up as much on average ahead of Winter 2024.
• Focus remains on Capitol Hill where lawmakers are still unhappy with the Biden ban on LNG exports, with possible legal claims being put forward to get the ban dismissed. 

Natural Gas Technical Analysis: Natgas hits pre-Ukraine levels

Natural Gas is facing a more substantial downturn. Traders fear Biden’s current Gas-exporting moratorium could be lifted, leading to an influx of Natural Gas supply flooding markets. Set against demand which is expected to remain low, such an influx would tip the price lower. 

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. Should 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 too. 

XNG/USD (Daily Chart)