Natural Gas price set to break September’s high

• Natural Gas rallies to near $3 as Wheatstone production in Australia gets cut. 
• The US Dollar trades sideways ahead of the ECB interest-rate decision. 
• US Natural gas prices might be nearing their peak as analysts see weak demand ahead.

Natural Gas prices are increasing again after fresh news from the Australian Wheatstone LNG production site from Chevron. Adding to the lingering union strikes, another 25% production cut at the facility has been announced due to a workers’ fault. It appears it will take a few days for the production cut to be resolved.

In the lingering dispute between Chevron and union workers, Chevron has reached out to the Australian regulator to start mediation talks. The stalemate isn’t likely to get resolved anytime soon as these talks tend to take time. Meanwhile, in Europe demand is fading with EU gas storages almost full ahead of the winter season. 

At the time of writing, Natural Gas is trading at $2.962per MMBtu.  

Natural Gas news and market movers

• Chevron has asked the Australian regulator to start intermediation between the company and union workers to get the stalemate resolved.
• Although Australian supply looks disrupted, the demand side remains subdued with European gas storages near full.
• In comparison to 2022, gas demand in Europe for 2023 has been on historic low levels.
• The European Central Bank (ECB) is expected to publish new inflation and growth forecasts for the Eurozone. With Germany already revising its growth forecasts for 2024 to contraction, Natural Gas demand could hit further lows. Any downgrades in growth could mean less demand for LNG. 
• European gas storage is expected to survive the upcoming winter and end the season with 44% supply left. European storage is at 93%.

Natural Gas Technical Analysis: nearing its peak

Natural Gas has been on a tear this week and is at a crucial level on the charts. With $3 being a double top looking back at the beginning of September, a rejection might trigger a substantial drop in the price action. A breakthrough would mean that Gas is to cross the ascending trend channel to test the upper band near $3.20.

As already mentioned, $3 is the target and hard nut that needs to be cracked. Seeing the current equilibrium, a catalyst is needed to move the needle upwards. That could come with more supply disruptions from Australia or sudden changes in the current gas storages in Europe due to a sudden peak in demand. In such events, Gas prices could rally to $3.20, testing the upper band of the ascending trend channel.

On the downside, the 200-day Simple Moving Average (SMA) at $2.89 has been turned into support. Should that give way on a downside move, some area will be crossed before the next support kicks in at $2.73. This level aligns with the 55-day SMA, which is likely to step in to avoid any nosedive moves in the commodity. 

XNG/USD (Daily Chart)