Natural Gas off session highs as US session triggers profit taking

  • Natural Gas rallied to $2.77 in European trading hours and reverses as US markets open up. 
  • The US Dollar moves sideways as traders await the Jackson Hole Symposium on Friday.
  • The overall technical picture sees Natural Gas being supported by an important technical indicator.

Natural Gas price jumps higher above Friday’s high as talks failed to reach an agreement in Australia. Wage negotiations are going nowhere between port authorities and workers in one of the most important LNG terminals in Australia. More workers in ports and terminals across Australia are joining the demand for higher wages, pointing to a possible shutdown of more than 10% of the world supply by the first week of September if there is no agreement. 

The US Dollar (USD), in the meantime, is not expected to show any fireworks before Friday. The Greenback is even taking a small step back on Monday as markets brush off the gloom from China’s sluggish economic recovery. So any moves to the upside will be fundamentally affected by the demand for Natural Gas futures contracts in the wake of a possible supply shortage out of Australia. 

At the time of writing, Natural Gas is trading at $2.738 per MMBtu.  

Natural Gas news and market movers

  • TotalEnergies acquires 26% of AC-RL7 permit in Australia. 
  • Overnight numbers showed that China July LNG imports rose by 24.3%. 
  • China is expanding its LNG importers by starting up or expanding more trading desks in London, Singapore and Qatar. 
  • China’s onshore Yuan trades at its weakest point since November 2022. The economic recovery in China is failing, which could mean that broad demand on the internationl gas markets could be limited. 
  • France gas storage levels have risen to 86%, with overall Europe at 91%, ahead of target.
  • European gas futures soared 18% on the back of the Australian workers ultimatum. 
  • China’s LNG import growth is set to slow down for the winter, according to Bloomberg gas analyst Daniela Li. China has secured 37 long-term deals in the past two years, which could lead to oversupply by 2024.
  • Tropical storm Hilary has hit mainland California. For now there hasn’t been any reports of infrastructure or pipeline breaks in the overall gas network. Still, potential flooding could still cause damage to infrastructures. 
  • All eyes are focused on Friday, when the annual Jackson Hole Symposium will be the focal point for the week. In the event,  the US Federal Reserve tends to signal a change in its monetary policy going forward. 

Natural Gas Technical Analysis: Intraday gains

Natural Gas is soaring on the back of the headlines out of Australia, where talks are still ongoing though shutdowns at the start of September look inevitable. The 10% cut in supply as of then is not to be underestimated and already shows how fragile price stability is. US natural gas futures are already up 2.8% intraday, while European gas futures increase more than 12%.

On the upside, $3 is still the level to watch as the overall ascending trend channel since April is being respected. Should Natural Gas prices recover, look for a close above $2.935, the high of August 15, in order to confirm that demand is picking up again. More upside toward $3 and $3.065 (high of August 9) would be targets or levels to watch. 

On the downside, the trend channel is doing its work with a 55-day Simple Moving Average (SMA) at $2.656, which is underpinning the price. In case more downside pressure builds, look for $2.58, which aligns with the lower trendline of the channel.

XNG/USD (Daily Chart)

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