Natural Gas bull run steams on with China buying up across the globe

• Natural Gas prices break above $2.60, a four-month high.
• China’s biggest LNG buyers placed orders to further expand its LNG tanker fleet.
• The US Dollar Index sinks after US CPI shows the economy is back on track in its disinflationary path. 

Natural Gas price (XNG/USD) is steamrolling on Thursday, reaching the highest level in four months and breaking another important technical level on more headlines that China is cornering the Gas markets. China National Offshore Oil Corporation has placed an order for 12 ships worth 16 billion($2.2 billion) for Liquified Natural Gas (LNG) tankers. This adds to news that several trading hubs such as London have confirmed that more Chinese participants are buying up contracts at local European and US Gas markets. 

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies,  is trading substantially lower after recent Consumer Price Index (CPI) data revealed that the US inflation resumed its decline. Although markets were quick to price in again two rate cuts for 2024, all US Federal Reserve officials and even Fed Chairman Jerome Powell are very vocal in pushing back on those bets by saying that rates might be staying longer at current levels. The trading conditions for the Greenback have changed and could now see further easing (or selling)with every economic data point undershooting market expectations. 

Natural Gas is trading at $2.61 per MMBtu at the time of writing.  

Natural Gas news and market movers: Divergence between EU-US markets

• While US Gas prices are going through the roof, European Gas markets are rather trading steadily in a tight range with sluggish demand in play with Europe still carrying robust stocks into its refueling season.
• For nearly four months, no LNG carrier has passed through the Red Sea ever since the Houthi rebel attacks started to take place, Bloomberg reports.
• Since the pandemic, China is back on top of the leaderboard in importing LNG, measuring around 71.3 million tons last year. 
• Continuing disruptions in the Red Sea are forcing LNG vessels to reroute around Africa to transport fuel between the Atlantic and Pacific ports. As a consequence, Asian buyers only have a limited pool of suppliers available to buy LNG from unless they’re willing to pay for higher shipping costs.

Natural Gas Technical Analysis: Are we really going to $3.00?

Natural Gas is rising sharply, even taking out the very important 200-day Simple Moving Average (SMA) around $2.53. This brings XNG/USD spot price in a whole other ballpark, where $3.07 looks to be the first upside big profit target at hand. This would mean another 18% gains on the table, should the US Dollar continue to weaken and China keeps propelling demand. 

The $3.00 marker as a big figure is the first level to watch on the upside. Once through there, the pivotal level near $3.07 (high of March 6, 2023) will come into play and mark a new high for 2024. Further up, there is room for a quick crossing towards $3.69.

On the downside, ahead of the double belt with the 100-day SMA at $2.09 and the pivotal level at $2.11 (low of April 14, 2023), the 200-day SMA now should act as support near $2.53. Should both support areas fail to hold, then the ascending green trendline near $1.98, together with the 55-day SMA at $2.00, should avoid a further decline.  

Natural Gas: Daily Chart