Natural Gas (XNG/USD) Forecast: Retreats Below $1.80 Amidst Market Volatility

The past week saw a discernible retreat in natural gas prices (XNG/USD), paralleling a downturn in US equities, which reached new session lows. As the US trading session progressed, a concerted selloff enveloped equities, commodities, and bonds, mirroring Thursday’s market temperament.

This downward trajectory positions Natural Gas on a path to close the week beneath the $1.80 mark, erasing any prospects of mitigating its weekly depreciation.

US Dollar’s Ascendancy and Its Implications

The US dollar experienced a surge in safe-haven demand, a reaction to unexpected spikes in US Producer Price Index (PPI) figures.

This inflationary pressure fueled speculations of a postponed rate cut by the Federal Reserve (Fed), shifting market expectations from an anticipated June adjustment to possibly September. The consequential rise in the DXY US Dollar Index underscored the USD’s resilience against its G20 counterparts.

External Factors Influencing Natural Gas Demand

The International Energy Agency’s optimistic oil demand forecast has indirectly buoyed expectations for increased natural gas demand. In a notable development, TC Energy announced the sale of a pipeline in British Columbia to Nisga’a Nation, a move aligned with TC’s broader $2.2 billion divestment strategy.

Meanwhile, Europe’s gas storage levels exceed 60%, with rising temperatures potentially reducing demand. However, due to more expensive carbon permits and Asian investors taking advantage of Europe’s relatively affordable gas futures, gas prices in Europe are on the rise.

In conclusion, a complex interplay of global economic indicators, policy speculations, and geopolitical developments shapes the natural gas price forecast.

The immediate outlook remains bearish as prices grapple with the dual pressures of a strengthening US dollar and fluctuating demand projections. Investors and analysts alike remain vigilant, closely monitoring these variables to gauge future price movements in the XNG/USD market.

Natural Gas (NG) Price Forecast: Weekly Outlook

In the recent trading week, Natural Gas (NG) witnessed a significant downtrend, closing at $1.759, which marks a decline of 5.58%. This movement has put the spotlight on critical technical levels that could determine NG’s trajectory in the coming sessions.

Key Technical Levels: The pivot point, acting as a crucial psychological and technical marker, is set at $1.784. This level serves as a demarcation line between a potential bullish recovery and continued bearish pressure.

Immediate resistance levels are identified at $1.852, $1.904, and $1.952. These thresholds represent key barriers that NG must surpass to signal a reversal from its current downtrend.

On the downside, support levels at $1.725, $1.662, and $1.609 offer cushions that could halt further declines and potentially provide rebounding points.

Technical Indicators and Analysis

The Relative Strength Index (RSI) is currently at 39, indicating bearish momentum but also hinting at the possibility of an oversold condition that could precede a rebound.

The 50-day Exponential Moving Average (EMA) at $1.8236 reinforces the bearish sentiment, with NG trading below this moving average, suggesting a lack of bullish strength in the short term.

The formation of a bearish engulfing candle on the daily chart, coupled with a descending channel on the 4-hour timeframe, underscores the bearish outlook. The resistance level around $1.85 within this channel further validates the current downtrend.

Overall Outlook: The technical outlook for natural gas remains predominantly bearish, with the commodity trading below the pivotal $1.784 level. A continuation of this trend could see NG testing lower support levels.

However, a decisive break above the pivot could shift the bias towards a more bullish sentiment, opening the path for recovery towards higher resistance levels. Investors and traders should closely monitor these technical indicators and levels to navigate the volatile natural gas market effectively.