Natural Gas stays pressured towards 31-month low amid US Dollar rebound, mixed sentiment

• Natural Gas holds lower ground after declining in the last two consecutive days.
• Fears of less energy demand from Asia, mild winter in Europe weigh on the quote.
• US Dollar pares recent losses as yields take a breather at multi-day low.
• Banking crisis, official inventory from EIA will be in focus for fresh impulse.

Natural Gas stays pressured around $2.34, following a two-day downtrend heading into Tuesday’s European session. In doing so, the energy prices bear the burden of the US Dollar’s corrective bounce, as well as the market’s fears of easing gas demand and higher supplies.

US Dollar Index (DXY) bounces off the lowest levels since early February, marked the previous day, while snapping a three-day downtrend, mildly bid around 103.40 by the press time. In doing so, the greenback’s gauge versus the six major currencies traces the late Monday’s recovery in the US Treasury bond yields, as well as the hawkish Fed bets, to tease buyers.

Elsewhere, fears of easing demand supersede the supply crunch fears, initially backed by the Russia-Ukraine crisis. In this regard, The Guardian quotes Seb Kennedy, head of data insights at TransitionZero while saying, “An unexpectedly mild winter in Europe and lower demand from Asia have tempered enthusiasm for the fuel, with a shipload now expected to earn about $37m profit. The news also stated that despite the current enthusiasm for Liquefied Natural Gas (LNG), next year may be the last that the number of LNG terminal projects of any size will move forward, as global appetite for natural gas is expected to fall.

On a different page, hopes of easing the banking crisis seem to have favored the market sentiment and drowned the US Dollar. UBS’ takeover of the troubled Credit Suisse, by paying 3 billion Swiss francs (£2.6bn), eased the market’s baking fears. On the same line were statements from the US Federal Deposit Insurance Corporation (FDIC) mentioning that the deposits of Signature Bridge Bank will be assumed by a subsidiary of New York Community Bancorporation.

It’s worth noting that the mixed concerns around the banking turmoil challenge the previous risk-on mood and join the mixed concern about the major central banks’ next moves to revive the US Treasury bond yields and weigh on commodity prices.

Moving ahead, Natural Gas traders should keep their eyes on the risk catalysts, as well as the weekly official gas inventories from the Energy Information Administration (EIA).

Technical analysis

With late February’s failure to cross the 50-DMA hurdle, currently around $2.73, Natural Gas bears are likely to approach the previous monthly low surrounding $2.17, also the lowest level since August 2020.