Natural Gas News: XNG/USD pares the biggest daily jump in seven weeks below $2.80 amid demand fears

• Natural Gas Price prints mild losses at the highest level in five weeks.
• US Dollar’s failures to defend week-start gains, mixed sentiment and key resistance break favored XNG/USD bulls earlier.
• Fears of witnessing less energy demand from US, China prod Natural Gas buyers.

Natural Gas Price (XNG/USD) prints the first daily loss in four around $2.77 as market players reassess the previous day’s rally during early Tuesday. That said, the XNG/USD rose to the highest levels in five weeks the previous day as the sluggish US Dollar joined the technical breakout. However, the fresh doubts about the energy demand from the US and China join sluggish markets to challenge the commodity buyers of late.

US Dollar Index (DXY) aptly portrays the market’s cautious mood ahead of this week’s US inflation data, especially amid a light calendar and mixed macros, while making rounds to 102.00 by the press time. That said, mixed signals from the Federal Reserve (Fed) officials also restrict the DXY moves of late. However, recently firmer US Treasury bond yields and the looming economic fears on China and Eurozone put a floor under the DXY prices, which in turn weigh on the XNG/USD.

That said, Fed Governor Michelle Bowman as he said that additional rate increases will likely be needed to lower inflation back to target. However, the greenback dropped afterward as New York Fed President John C. Williams said he expects that interest rates could begin to come down next year. The policymaker also conveyed hopes of witnessing a slightly higher unemployment rate as the economy cooled.

It should be noted that China's Ministry of Water Resources cited a stronger response for flooding to Level III in Inner Mongolia, Jilin and Heilongjiang while highlighting the recently escalating fears from typhoon Doksuri.

On the other hand, softer US employment data and mixed early signals for the inflation flag concerns about the health of the world’s largest economy. Additionally, the looming rate hikes and the major central banks’ “higher rates for longer” concerns also challenge the macroeconomic outlook and the Natural Gas Price.

Amid these plays, Wall Street ended Monday on the positive side while probing the US Treasury bond yields as they consolidated Friday’s heavy fall. That said, the benchmark US 10-year Treasury bond yields rose to 4.10% by the press time while the S&P500 Futures remain sidelined near 4,538, struggling to defend the first daily gains in five.

To sum up, the XNG/USD struggles to extend the previous day’s trend line breakout as bulls take a breather after a heavy run-up. Also challenging the Natural Gas buyers are the challenges to the energy demand from the US, China and Eurozone.

Technical analysis

A daily closing beyond a six-week-old resistance line, now immediate support around $2.70, keeps the Natural Gas Price on the buyer’s radar even as the overbought RSI prods the XNG/USD bulls of late.