- Natural Gas prices jump to $3.404.
- The US Dollar trades directionless ahead of the US jobs report.
- US Natural Gas prices could head higher on the possibility of a cold front coming in sooner than expected.
Natural Gas prices are increasing to new year-to-date highs as Australian union workers are discussing the possibility to resume strikes. The resurge in strike risk comes after Chevron reneged earlier commitments on pay and conditions to workers. Expectations are that at the earliest Monday, a notice will be given that in seven days industrial action will take place, again risking a 10% supply shortage in the LNG market in the near term.
Meanwhile, the US Dollar (USD) sees traders bracing for the datapoint that has been keeping every trading desk on edge throughout the week. The monthly US jobs report is due later on Friday and will finally confirm or contradict what earlier numbers this week have been suggesting: the US economy and its job market are starting to slow down. There is a very fine nuance between slowing down instead of contracting.Expectations are that the US economy will continue to add jobs, pointing to economic growth, though in a less convincing way than previous months.
Natural Gas is trading at $3.4040 per MMBtu at the time of writing.
Natural Gas news and market movers
- Chevron appears to be backtracking on earlier commitments given to LNG union workers in order to resolve the strikes that took place at the beginning of September.
- On Thursday, workers discussed and endorsed restarting strike actions.
- Expectations are that at the earliest, the legal binding seven-day notice will be delivered by Monday, which means strikes will start in roughly ten days’ time.
- Ports in Wheatstone and Gorgon account for nearly 10% of the world’s supply in LNG.
- Shell reported that its earnings from gas trading have rebounded in the third quarter.
- Pakistan is open to sign a long-term liquefied natural gas purchase agreement to make up for an expected shortfall in domestic fuel production.
Natural Gas Technical Analysis: dreaming of $4
Natural Gas peaks to a new year-to-date high with $3.4080 as a new level to pencil in the books. The move comes after Australian union workers are considering going back to strike as Chevron is backtracking on earlier concessions in order to resolve the stalemate between the Union and the energy company. With market supply facing the possibility of a short squeeze of near 10% in the near term, together with a substantial drop in temperature forecasted for Europe in the coming weeks, Natural Gas prices could reach $4.
With the firm peak and breakthrough out of the trend channel on Thursday, it will be crucial going forward that the upper band of that same trend channel acts as support. There aren’t any significant resistance levels except for $3.65, the peak of January 17. From there, the high of 2023 near $4.3080 comes into play as the next level on the upside.
On the downside, the trend channel needs to act as support now, near $3.30. In case that breaks down again, Natural gas prices could sink lower to $.3.07, with that orange line identified from the double top around mid-August. Should the drop become a broader sell-off, prices could sink below $3 towards $2.85, near the 55-day Simple Moving Average.
XNG/USD (Daily Chart)
Natural Gas FAQs
Supply and demand dynamics are a key factor influencing Natural Gas prices, and are themselves influenced by global economic growth, industrial activity, population growth, production levels, and inventories. The weather impacts Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources impacts prices as consumers may switch to cheaper sources. Geopolitical events are factors as exemplified by the war in Ukraine. Government policies relating to extraction, transportation, and environmental issues also impact prices.
The main economic release influencing Natural Gas prices is the weekly inventory bulletin from the Energy Information Administration (EIA), a US government agency that produces US gas market data. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, a day after the EIA publishes its weekly Oil bulletin. Economic data from large consumers of Natural Gas can impact supply and demand, the largest of which include China, Germany and Japan. Natural Gas is primarily priced and traded in US Dollars, thus economic releases impacting the US Dollar are also factors.
The US Dollar is the world’s reserve currency and most commodities, including Natural Gas are priced and traded on international markets in US Dollars. As such, the value of the US Dollar is a factor in the price of Natural Gas, because if the Dollar strengthens it means less Dollars are required to buy the same volume of Gas (the price falls), and vice versa if USD strengthens.
