Natural Gas edges up back above $2 despite bearish fundamentals

• Natural Gas price ticks up, although its upside looks capped due to easing demand. 
• Gas prices could dip lower in the coming days with Freeport supply coming in.
• The US Dollar Index dives after a sharp appreciation from the Japanese Yen unofficially attributed to an intervention. 

Natural Gas (XNG/USD) prices are ticking up above $2 on Monday, showing a distorted picture of fundamentals against correlations. Fundamentally, Gas prices are expected to retreat a little with news that points to higher supply and lower demand, a textbook combination for lower prices. On the demand side,  Europe is about to face a warm weather front, slashing the demand for Gas in the continent. Adding to this, more supply is likely coming online as the US Freeport Liquified Natural Gas (LNG) plant overcomes some of its technical problems, which have weighed on production for the last few months.  

Meanwhile, the US Dollar Index (DXY) is easing substantially, helping to push commodities’ prices higher. The easing comes on the back of an unofficial intervention from Japanese authorities to support the Japanese Yen (JPY), which has strengthened substantially against the US Dollar overnight. This had a ripple effect on the Greenback against other major currencies and pushed commodities higher.  

Natural Gas is trading at $2.05 per MMBtu at the time of writing.  

Natural Gas news and market movers: Easing on both sides

• Bloomberg reports that The Freeport LNG export plant in Texas has restarted one of its production trains, according to traders in the commodity.
• BP has signed a deal with Korea Gas Corporation to deliver 9.8 million tons of LNG over 11 years. 
• European Natural Gas prices are extending their decline as a warmer weather front moves in for this week and the next. 
• German Gas storages are still at 67% full, while reserves for overall Europe are at 62%.

Natural Gas Technical Analysis: Easing in two speeds

Natural Gas is bound to ease a little with flows from the US Freeport plant coming back online, adding to US export volumes, which were tighter these past few weeks. Meanwhile, Europe will see its reserves holding up this week with a warm front coming in. This should at least open some room for a bit of easing in Gas prices, which is already taking place in the European Gas market, while the US market needs to catch up. 

On the upside, the blue line at $2.11, the 2023 low, and the 100-day Simple Moving Average (SMA) at $2.10 are acting as a resistance. Further up, the next level to watch is the January 25 high at $2.33.

On the other side, the $2.00 handle has worked as nearby support for now. Further down, a trifecta of support is formed at $1.88, with the ascending and descending trend lines crossing and the 55-day SMA. Should that level break, expect a quick downward movement to the year-to-date low at $1.60.

Natural Gas: Daily Chart