Photo by American Public Power Association on Unsplash
 

• Natural Gas rallies in Europe by over 10%, while US gas prices are negative. 
• The US Dollar takes it on the chin as the Chinese Yuan appreciates firmly against the Greenback.
• US Natural gas prices might see spillover from European gas futures and rally higher. 

Natural Gas prices are only soaring in Europe as workers in Australia have started their partial strikes on Friday. The volatility is peaking on the European gas market with European gas futures up over 10% at one point in European trading hours. Prices are set to rally further as from Thursday a full walkout could take place if no accord is being formed. 

Meanwhile, the US Dollar is tanking in a blood red trading day this Monday. The Greenback is losing big time against the Yuan, Yen, and Australian Dollar, each time down near 1%. This makes the DXY slide substantially lower. 

At the time of writing, Natural Gas is trading at $2.79 per MMBtu.  
 

Natural Gas news and market movers

• A big divergence in gas prices from a geographic point of view has emerged with European gas futures rallying nearly 10% to $93.29. It is a fresh monthly high for the month of September.
• Meanwhile, US gas futures were unfazed by the sudden spike in prices on the other side of the Atlantic Ocean. Traders might see some catch-up later this Monday once the US markets open.
• On Friday, the Baker Hughes Rig Count printed a steady number, residing near an 18-month low. US gas prices might spiral higher as well if the US gas production starts to fall short of demand.
• Several weather projections are pointing to a harsh winter to come for both the US and Europe. 
• Norwegian gas supply outages are yet again extended with the biggest one, the Troll gas field, extended until September 14th. 
• European gas storage is expected to survive the winter and end the season with 44% supply left. Currently, European storage is filled to 93% capacity.
   

Natural Gas Technical Analysis: Europe's problem 

Natural Gas prices in the US are starting to fall in a consolidation pattern where buyers and sellers are being pushed toward each other, ignoring supply risk out of Australia. Several technical elements such as the 200-day Simple Moving Average (SMA), the ascending trendline, and the 55-day SMA are moving toward each other. Once both buyers and sellers have reached their consolidation point, a breakout is due. In this case, it could mean Natural Gas prices rally higher with the Australian strikes creating a shortage of supply. 

On the upside, $2.83 needs to be taken out in order for this bounce to gain momentum. Once this rebound materializes, look for the 200-day Simple Moving Average (SMA) near $2.93. In case the price starts to break above there and head higher, $3 will be crucial with the high of September at stake. 

On the downside, the trend channel has done a massive job underpinning the price action. The 55-day SMA near $2.72 already provided support ahead of any test on the lower end of the trend channel. In case the 55-day SMA breaks, look for support near $2.66. 

(Click on image to enlarge)

XNG/USD (Daily Chart)

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