Natural gas prices (XNG/USD) surged higher on Tuesday, approaching a new yearly high. This uptick comes as Europe deliberates on maintaining gas flows via Ukraine for the next year and amidst an increase in supply from Norway. Norwegian gas flows have reached their highest levels since April, prompting Europe to engage in discussions with both Ukraine and Russia to ensure the continuity of gas supplies. This development brings back a contentious issue for Europe, which had previously committed to banning Russian gas. The uncertainties surrounding Europe’s ability to achieve independence from Russian gas are driving prices up, as traders anticipate a potential increase in gas purchases should Russia or Ukraine fail to reach an agreement.
The natural gas market shows robust activity with prices nearing the high of 2024. Brussels is currently exploring options to keep gas flows from Russia open for the next year. The price of natural gas is trading higher, marking its fifth consecutive day of gains. Although further increases are possible, the current price level is a significant resistance point, making it challenging to surpass. If the $3.07-$3.10 resistance range is broken, prices could quickly rise to $3.50.
The critical level of $3.07, last seen on March 6, 2023, remains a crucial threshold, as prices have yet to close above it on a daily basis. Additionally, a descending trend line at $3.12 poses another obstacle to further price increases. The fresh year-to-date high at $3.16 is the next major level to surpass.
The US Dollar Index (DXY), which measures the dollar’s strength against six major currencies, is holding steady above 105.00 ahead of Wednesday’s key events. The DXY experienced some movement on Monday due to the results of the European elections, but this has since stabilised. Traders are now focused on the upcoming Consumer Price Index (CPI) release and the US Federal Reserve’s rate decision and dot plot, scheduled for Wednesday.
At the time of writing, natural gas is trading at $3.07 per MMBtu. The market continues to display strength, with a fifth consecutive day of gains. Despite the potential for further price increases, significant resistance levels may limit upward movement. Should the $3.07-$3.10 barrier be breached, a swift rise to $3.50 could occur. Key levels to watch include the $3.07 mark, the descending trend line at $3.12, and the year-to-date high at $3.16. On the downside, support levels include the 200-day SMA at $2.53, the 55-day SMA at $2.34, and the 100-day SMA at $2.11.
Touchstone Exploration Inc (LON:TXP) is a Canadian-based, international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. Primera Oil and Gas is the Trinidadian subsidiary of Touchstone.
