Natural Gas sinks near 3% despite heated tensions in the Middle East

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• Natural Gas snaps below recent multi-year low and prints new three-year low.\xa0
• Traders are sending Gas lower on tepid demand outweighing rising tensions.\xa0
• The US Dollar Index is flat above pivotal support with the US closed for holiday.\xa0

Natural Gas (XNG/USD) is trading around $1.63 and is unable to flare up after Iran accused Israel for blowing up one of its key vital Gas pipelines last week. The New York Times reported that Iran had proof of Israel being behind the attack. Meanwhile Israel itself is ramping up pressure on Gaza and Hamas by issuing a demand to give up the last hostages before the Shabbat in two weeks, or another massive ground offensive will be rolled out.\xa0

The US Dollar (USD) meanwhile is trading steady at a pivotal support level in the US Dollar Index (DXY). With US traders not in the market this Monday due to President’s Day, it looks like low volumes will be unable to really move the needle here. Traders will rather focus on the publication of the Minutes from the US Federal Reserve’s January meeting on Wednesday, and several US Purchase Manger’s Indices on Thursday which could make some moves for the Greenback.\xa0

Natural Gas is trading at $1.63 per MMBtu at the time of writing.\xa0\xa0

Natural Gas market movers: Tensions set to rise further

• Vice President of the EU commission Josep Borrell said that Europe has started patrolling in the Red Sea.
• Qatar is set to announce a string of substantial LNG deals with both Europe and Asia, Al-Kaabi confirms.\xa0
• Korea Gas, South-Korea’s biggest LNG group, agreed to extend its long term LNG contracts with Oman for another 10 years.\xa0
• Elevated temperatures are seen in Europe for the rest of the month, and will cut demand for Gas further in the region, below average demand for this time of year.\xa0

Natural Gas Technical Analysis: Gas that nobody wants

Natural Gas keeps struggling to find a floor amidst the more and more tepid demand globally. Under normal circumstances, recent headlines out of Israel and Iran would have been enough to send Gas prices soaring. Though, even with these possible hiccups in Gas supply, Europe has no need for them which means there is still a supply surplus in the Gas market with traders looking for the right fair value amidst all of this.\xa0

On the upside, Natural Gas is facing some pivotal technical levels to get back to. First stop is $1.99, – the level which, when broken, saw an accelerated decline. Next is the blue line at $2.13 with the triple bottoms from 2023. In case Natural Gas sees sudden demand pick up, possibly $2.40 could come into play.\xa0

Keep an eye on $1.80, which was a pivotal level back in July 2020 and should act as a cap now. Should more supply emerge in the markets, or more weakening data globally point to even more sluggish global growth – $1.64 and $1.53 (the low of 2020) are targets to look out for.\xa0

XNG/USD (Daily Chart)