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Natural Gas has experienced a decline following reports that the Biden administration is set to prolong the LNG export moratorium by 9 to 12 months.
Piden’s Pause Contiunes
The US Dollar Index is flirting with a break below 104 as the dollar fails to find nearby support. The LNG ban remains in place even after the elections, and the US Dollar is feeling the de-escalation in geopolitical tensions with some safe haven outflows. This has led the dollar to retreat from Monday’s highs and search for support.
The 104 marker does not look solid and could give way before finding solid support in the form of the 200-day SMA near 103.59. Market-moving events include three US Fed members due to speak this Wednesday.
Natural Gas is currently trading at $1.98 per MMBtu. Tensions are high at Capitol Hill across political sides with US President Joe Biden’s gas export ban, with a House Energy and Commerce subcommittee hearing taking place this Wednesday.
Key Players: Qatar, India, UK, Norway
Qatar agreed to lower its Liquified Natural Gas prices in a longer-term agreement with India, while Petronet concluded a contract with the Emirate for 7.5 million tons of LNG per year for 20 years.
The UK has concluded a deal to sell 1 million tons of LNG with Repsol between 2025 and 2027. Norway’s biggest Oil and Gas company Equinor ASA saw its profits fall in the fourth quarter due to substantially lower gas prices on global markets.
Technical Outlook
Technically, natural gas is trading in difficult circumstances to stage a rally. Markets are starting to consider that ceasefire talks in the Middle East are a good thing, as all parties are still talking and trying to work out an agreement. On the upside, Natural Gas faces pivotal technical levels to get back to, including the low of January at $2.10, the intermediary level near $2.48, and the test near $2.57 at the purple line.
Fundamental factors in play
Fundamental factors driving the price of Natural Gas include supply and demand dynamics, weather, competition from other energy sources, geopolitical events, and government policies relating to extraction, transportation, and environmental issues.
The main economic release influencing Natural Gas prices is the weekly inventory bulletin from the Energy Information Administration (EIA), which comes out on Thursday at 14:30 GMT. The value of the US Dollar is a factor in the price of Natural Gas, as it is the world’s reserve currency and most commodities, including Natural Gas, are priced and traded on international markets in US dollars.
