Natural Gas prices experienced a drop of over 2% amid reports of Israeli opposition parties discussing plans to oust Prime Minister Benjamin Netanyahu. This decline was fueled by profit-taking activities on Monday and intensified as tensions in Israel escalated following the attack on a refugee camp in Rafah, which resulted in the death of at least 45 people. The situation in Israel raised concerns internationally, with several countries recognizing the Palestinian state as strikes in Rafah continued.
The US Dollar Index also retreated further on Tuesday, testing the last lines of defense, after a bank holiday on Monday for Memorial Day. Japanese Finance Minister Shun’ichi Suzuki warned against further devaluing the Japanese Yen and emphasized the importance of maintaining a stable exchange rate. The US economic agenda is set to resume with a slew of data releases and speeches from Federal Reserve speakers, potentially affecting market movements.
Natural Gas is currently trading at $2.75 per MMBtu, with speculation surrounding the possibility of an opposition coalition forming in Israel to take over power from Prime Minister Benjamin Netanyahu. This event could potentially de-escalate tensions in the region and lead to a ceasefire, easing concerns in the market. If a new coalition government were to come into power, the current offensive in Gaza could be ended, potentially resulting in a nosediving correction for Natural Gas prices.
Technical analysis indicates that Natural Gas prices are sliding lower, with the $3.00 marker being easily broken on Wednesday. The pivotal level near $3.07 remains key, as prices have failed to close above it. On the downside, the 200-day Simple Moving Average (SMA) is acting as the first support near $2.53, with further support levels at $2.14 and $2.11. Factors such as supply and demand dynamics, weather conditions, competition from other energy sources, geopolitical events, and government policies all play a role in influencing Natural Gas prices.
The US Dollar, being the world’s reserve currency, impacts the price of Natural Gas as most commodities are priced and traded in USD. Economic data releases that affect the US Dollar can, therefore, influence the price of Natural Gas. The weekly inventory bulletin from the Energy Information Administration (EIA) is a crucial economic release that impacts Natural Gas prices, providing important market data. Economic data from major consumers of Natural Gas, such as China, Germany, and Japan, can also influence supply and demand dynamics in the market. As such, keeping track of these factors is essential for understanding and predicting movements in Natural Gas prices.
