Natural gas is stuck in a tight range around its 200-day EMA as US Independence Day holiday closed the New York session and drained trading volume. Analyst Christopher Lewis at FXEmpire sees no catalyst to break it, with a short-lived US heat wave too weak to dent supply and Qatari LNG flows recovering to about 80%.
Natural gas rallied slightly on Friday, but the move means little because the session was closed for the US Independence Day holiday. The New York market stayed shut while Americans took the day off, leaving what little trading there was to what was probably overnight position squaring in Asia. The market continues to hover around the 200-day EMA, holding the same tight range it has kept for a while.
A market waiting for a catalyst
Traders are looking at natural gas as a market searching for a catalyst, according to FXEmpire’s Christopher Lewis. A heat wave in the United States offers little help, because Lewis expects it to be short-lived. It will not be enough to take down supply, so the price is unlikely to move much.
That leaves a range that suits short-term traders and frustrates everyone else. A break below the $3 level could open a move down to $2.75, though Lewis does not see that happening. He instead treats any spike higher on a possible further heat wave as a chance to get short at the first signs of exhaustion.
Qatari LNG flows return toward normal
The supply worry that had threatened to lift US prices is fading. Concern that Qatar could not send the European Union its usual volumes of liquefied natural gas has eased, as Qatari LNG flows have recovered to about 80%. By the time winter arrives those flows should be close to normal, leaving a quiet market typical of this time of year.
Source: FXEmpire
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