US natural gas futures held steady for the second consecutive session on Thursday, after registering significant gains on both Friday and Monday. As of the time this article was written, it was trading for $2.86 per MMbtu. Concerns over supply disruptions and colder temperatures are major factors for bulls in Europe.
The US Dollar’s Selling Pressure
The US Dollar’s Selling Pressure
The greenback is under pressure to sell, which also supports the natural gas price. The dollar index recovered most of its losses from the previous session on Wednesday. However, the index has been in a range for almost two weeks as it lacks the momentum to move beyond the resistance level at $100.
Recent CB data on consumer confidence weighed heavily on the dollar, which in turn pushed up natural gas prices. Conference Board reports that consumer confidence dropped in September to its lowest level in more than three years. The index fell from 105.6 in august to 98.7 for September due to pessimism about the US business and labor markets.
Investors will now be watching Jerome Powell’s remarks on Thursday for additional clues. The tone of his speech will probably counter the dovish expectations of investors. The PCE Price Index, which is the Fed’s preferred inflation gauge, will be released on Friday. Powell has said that the Fed will base its policy on the incoming data. The figures released on Friday will have a direct impact on the US dollar and, by extension, natural gas prices.
Weather conditions
Weather conditions
Weather is a major driver of demand and supply for natural gas. According to the US National Hurricane Center (US National Hurricane Center), Hurricane Helene is strengthening rapidly as it moves across the Gulf of Mexico towards the US. It is predicted to be a major category 4 hurricane. Experts have declared it a state of emergency in Florida. It is forecast to hit on Thursday.
This will increase prices. The milder temperatures expected in the US will dampen short-term cooling demand. Investors will be watching closely to see if the disruptions in production will compensate for low demand. Bulls are pushing prices up to the psychological level of $3, and then beyond that to levels seen in June.
Natural gas prices are also supported by lower temperatures in Europe and concerns about supply disruptions. As the week draws to a close, temperatures are expected to be lower in many parts of Europe than normal for the season. The use of gas will increase as a result.
Geopolitical tensions within the region are also a positive factor for gas prices. During the conflict between the Israeli army and Hezbollah in southern Lebanon there is growing concern over the supply. Gas fields in Israel supply both the Israeli market and neighbouring countries such as Jordan and Egypt.
There are also concerns that Russia could be planning more attacks on Ukraine. It could have an impact on the natural gas dynamics of the region, as Russian gas is transported through Central Europe via pipes in Ukraine.
Natural gas price forecast
The price of natural gas has been fluctuating in recent years due to the large supply coming from countries such as the United States and Qatar. The majority of this gas was shipped to Europe, where Russia has largely been cut off. Gas prices dropped from nearly $10 in 2022, to $1.54 this year.
It has formed a head and shoulders pattern on the weekly chart. This is a common reversal signal. There are signs of a triple bottom pattern, which is a sign that a reversal has occurred.
It has jumped over the 50-week moving median, while oscillators such as the Relative Strength Index and MACD all point upwards. Natural gas is a good example of a contrarian argument, which means that its price will rise. The next level to watch is $3.62 as this was its high on October 30th. If the price breaks above $3.62, it will indicate more upside.
This post Brace yourself for a Natural Gas Price Comeback – Technical Analysis may be updated as new information becomes available
