Today’s market analysis on behalf of Rania Gule Market Analyst at XS.com

20^thOctober 2023

Natural Gas Prices Decreased this Week, and at the moment, pure gasoline is buying and selling at $3.26 per million British Thermal Units (MMBtu). Gas provides to Europe remained larger than common regardless of the closure of gasoline imports from Israeli occupation via Egypt. With European gasoline storage tanks crammed as much as 85%, evidently the European Union is ready to face the early chilly temperatures earlier than the arrival of winter. Even with geopolitical tensions threatening to escalate within the Middle East, one of the world’s largest pure gasoline demand sources, Europe, appears to have the capability to maintain itself for an prolonged interval.

At the identical time, the U.S. Dollar Index (DXY) has been fluctuating with excessive volatility and instability. Geopolitical tensions in Palestine are supporting the circulate of liquidity into safe-haven belongings. On the opposite hand, yields on U.S. Treasury bonds have risen to their highest ranges in years, with 10-year U.S. Treasury bonds surpassing 5% at one level. A elementary rule in monetary markets is that yields above 5% characterize a turning level, the place excessive yields on bonds and securities could start to hurt the economic system and doubtlessly result in a recession shortly, weakening the energy of the U.S. greenback.

I imagine that the market drivers influencing pure gasoline costs are the escalating occasions within the Middle East at current. The newest information from the Egyptian Ports Authority exhibits that liquefied pure gasoline (LNG) vessels are departing ports with solely partial hundreds of LNG as a result of closure of gasoline fields within the occupied Palestinian territories.

With the growing frequency of nightly shelling in Middle Eastern international locations and the deployment of drones by a U.S. navy service, the United States may very well be drawn into warfare, which might result in a rise in gasoline costs within the close to time period. According to estimates from the Institute of Energy Economics, Japan (IEEJ), the world will want $7 trillion to make sure an sufficient provide of gasoline till 2050.

Today, the markets are eagerly awaiting some necessary information along with geopolitical information and developments within the Middle East battle. The Baker Hughes Gas Rig Count report is scheduled to be launched this night at roughly 17:00 GMT. It’s value noting that the earlier determine was 117, which remains to be removed from the excessive quantity of 167 in 2022. No market expectations have been set, and it’s believed that this information will considerably influence the markets by the top of the day and the weekly closures of pure gasoline and different belongings.

Technical Analysis of the(XNG/USD) Prices:

Natural gasoline costs stay elevated, up greater than 25% because the begin of the battle in Gaza. With the strategy of the winter season, I anticipate elevated worth volatility. Gas costs might see a big decline as temperatures drop and winter formally begins. Prices can even be influenced by heightened dangers as a consequence of tensions within the Middle East throughout the winter interval. I count on a considerable enhance in demand for pure gasoline and petroleum derivatives, resulting in uncommon worth actions within the markets.

Given the present geopolitical headlines and the technical worth motion on the day by day chart, I anticipate sharp fluctuations within the quick and medium time period. There aren’t any vital resistance ranges in place to stop additional worth will increase, aside from the $3.65 stage, which was final seen on January 17. If this stage is breached and confirmed, costs are more likely to climb in the direction of the 2023 excessive, close to $4.3080.

(XNG/USD) Prices Chart – MT4 Platform from XS.com

From one other unfavorable technical perspective, the bearish state of affairs turns into energetic if the pattern channel fails to behave as help close to $3.37 and costs stay constantly under it, closing the week decrease. In this case, pure gasoline costs might briefly decline to round $3.07, which is close to the height help from mid-August. If the decline under this stage turns right into a major pattern, costs could drop under $3 in the direction of the world close to the 55-day easy transferring common at roughly 2.98 models.