Natural Gas price flat after Russia panic dissipates

• Natural Gas price trades little changed on Tuesday after geopolitical risk surrounding Russia eases with Wagner coup U-turn.
• The summer heatwave in much of North America and Europe continues to drive demand for Natural Gas to power air conditioning. 
• Price has climbed towards a significant level around $3.000 MMBtu where the longer-term downtrend could be at risk of reversing. 

Natural Gas price trades flat at the start of the US Session on Tuesday after posting four consecutive days of gains. Traders had been bidding up the commodity on the back of fears political turmoil in Russia could disrupt supply, and as higher-than-average temperatures in much of the Western World increase demand for Natural Gas used in air conditioning. 

XNG/USD is trading in the $2.800s MMBtu on Tuesday, as America wakes up.  

Natural Gas news and market movers 

• Natural Gas trades flat after the Wagner mutiny suddenly grinds to a halt, easing concerns Russian supply might suffer in the event of civil war, according to CNN. 
• Analysts also believe the market is pricing in a greater risk premium after the failed coup over the weekend. 
• Demand for Natural Gas to power air conditioning continues to be high as much of the US and Europe experience hotter-than-usual temperatures for this time of year, according to Natural Gas Intelligence. 
• The market may be reaching a temporary top as recent gains have been accompanied by falling participation in the Gas futures market, according to FXStreet Senior Analyst and Editor Pablo Piovano, in a report analyzing CME data on Monday. 
• Norwegian supply concerns, after outages at the Hammerfest LNG export terminal and the processing plants at Nyhamna and Kollsnes, continue to underpin prices. Norway has taken over from Russia as Europe’s main source of Natural Gas. 
• Weaker demand from faltering global growth, however, has offset the threat to supplies, according to an analysis by ANZ Bank cited on MarketWatch.
• Last week’s Purchasing Manager Index data was on the whole poor for most of Europe and the US, potentially indicating a weaker global economic growth trajectory.  

Natural Gas Technical Analysis: Recovery nears significant trend-determination level 

Natural Gas price is trading just below a key trend-determination level on longer-term charts. Although the commodity remains in a long-term downtrend since turning lower at the August 2022 peak, bearish momentum has tapered off considerably.

The Relative Strength Index (RSI) momentum indicator is converging bullishly with price on the weekly chart, something that occurs when price makes new lows but RSI does not. 

A break above the last lower high of the long-term downtrend at $3.079 MMBtu would indicate a reversal in the broader downtrend. 

Natural Gas: Weekly Chart

Given this level has not been breached yet, however, the downtrend remains intact and a break below the $2.110 year-to-date lows would provide a confirmation of a continuation down to a target at $1.546. This target is the 61.8% Fibonacci extension of the height of the roughly sideways consolidation range that has been unfolding during 2023 (marked 161.8% on charts). 

On the daily chart, price has been climbing within a roughly sideways market, although it has broken above both the 50 and not the 100-day Simple Moving Averages (SMA). 

Natural Gas: Daily Chart

Nevertheless, a break above the last lower high of the long-term downtrend at $3.079 MMBtu would be required to indicate a reversal in the broader trend. 

Such a move might then see prices rally higher to the next key resistance level at the 200-week SMA, situated at $3.813. 

Until that happens however, price will probably continue to consolidate within its range or even go lower.