Natural Gas: XNG/USD bears keep $2.13 on radar ahead of EIA inventories

• Natural Gas fades the previous day’s corrective bounce off five-week low.
• Hopes of more energy demand from China contrasts with challenges to sentiment to weigh on XNG/USD price.
• Inflation headlines, EIA Natural Gas Storage Change eyed for fresh impulse as the commodity drops toward the key support.

Natural Gas (XNG/USD) price seesaws around the intraday low of $2.23, fading the previous day’s corrective bounce off a five-week low heading into Thursday’s European session. In doing so, the energy instrument fails to cheer hopes of more demand from China amid fears of higher inflation and hawkish central bank actions, not to forget the firmer US Dollar.

News that China is up for importing 65,000 tonnes of Li liquefied natural gas (LNG) from the United Arab Emirates (UAE) joins optimistic comments from China Premier Li Qiang to put a floor under the XNG/USD. “The economic situation in March is even better than in January and February,” said China’s Premier Qiang. The policymaker, however, also raised geopolitical tension by opposing trade protectionism and decoupling, which indirectly targets the US, which in turn prods the Natural Gas bulls.

On the other hand, talks that German gas pipelines are dependable again for energy transportation, after previous challenges from Russia, weigh on the XNG/USD price. Further, the majority of the central bankers defend their previous bias about inflation and hence exert downside pressure on the commodity. Additionally, International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said on Thursday, “Urgently need faster, more efficient mechanisms for providing debt support to vulnerable countries.” Her comments renew banking fears which eased previously.

While portraying the sentiment, the US Dollar Index (DXY) clings to mild gains while S&P 500 Futures struggled around a one-week high marked the previous day. Further, the US 10-year and two-year Treasury bond yields grind higher after teasing the bond buyers the previous day.

Moving on, Weekly Natural Gas Storage Change data from the US Energy Information Administration (EIA), prior -72B, could direct XNG/USD moves. Though, major attention should be given to the headlines surrounding inflation and the banking system, not to forget China, for clear directions.

Technical analysis

Natural Gas bears stay hopeful of refreshing the yearly low, currently around $2.13, unless crossing a two-week-old horizontal resistance near $2.50.