Natural Gas Retreats as Traders Await Fed Meeting and EIA Inventories

Bullion Bite
Natural Gas Retreats as Traders Await Fed Meeting and EIA Inventories

The price of natural gas (XNG/USD) has retreated after bouncing off a one-month low the previous day. Despite recent hopes for more energy demand and geopolitical fears, the energy resource remains mildly offered at around $2.44 by press time. The XNG/USD price could be further challenged by recent headlines from China and the cautious mood ahead of Thursday’s official weekly Natural Gas Storage Change number from the US Energy Information Administration (EIA).

China's President Xi Jinping did not confirm an agreement to install new pipelines to send more natural gas to China from Russia, leading to a decline in the market’s hopes for overcoming banking fallouts to underpin the XNG/USD buyers. Additionally, mixed US data and the market’s hawkish calls for a 0.25% rate hike from the US Federal Reserve weigh on the commodity price, despite the US Dollar fading from the previous day’s rebound from a five-week low.

Moreover, Italy's news that it is floating new Liquefied Natural Gas (LNG) terminals to overcome the Russia-led energy shortage adds to the hopes of an easy winter in Europe, further challenging XNG/USD buyers. Risk catalysts and EIA inventories will be crucial in providing clear directions for the natural gas market.

Technical analysis reveals that the 10-DMA hurdle surrounding $2.53 challenges XNG/USD buyers, while the oversold RSI (14) joins multiple levels near $2.35-30 to test the natural gas bears. It remains to be seen whether the XNG/USD price will rebound if today's Fed decision drowns the US Dollar or there is a significant draw in the weekly EIA inventories.

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