Natural Gas Eases after Middle East Skirmish Boost as IEA Sees Slower Growth

  • NGAS
    (${instrument.percentChange}%)

NGAS Analysis

The attack of Hamas on Israel boosted oil prices on Monday and also helped NGAS extend its gains to the highest levels in nearly nine months. Middle East is an important natural gas hub and Iran is one of the biggest producers in the world.

Attention has turned to whether Tehran backed the attacks, carried by the Palestinian militant group. The country's permanent mission to the United States denied any involvement, but "stands in solidarity with Palestine" [1]. US Secretary of State Blinken also noted he has "not yet seen evidence that Iran directed or was behind this particular attack", speaking on CNN's State of the Union. However, he did stress the "long relationship" between Tehran and Hamas [2], which is designated as terrorist group by the US and other countries.

Iran's involvement in the attacks could be crucial for the natural gas market. The United States had pulled out of the JCPOA deal around Iran's nuclear capabilities in 2018, imposing restrictions on oil and gas exports from the Middle Eastern country [3]. The current administration has been trying normalize relationships, but any lifting of sanctions has now become much harder.

Natural gas prices soared in the aftermath of the Russian invasion in Ukraine, but slumped in the second half of 2022 as Europe and Asia interest diminished. This extended into the current year, but NGAS has been recovering since, as the market remains tight. The International Energy Agency (IEA) released its medium term report today, expecting slower demand growth of around 1.6% in 2022-2026, compared to the 2.5% average increase in the 2017-2021 period. It also warned of potential price volatility ahead, especially in the event of a cold winter. [4]

NGAS runs its third straight profitable month and hit the highest levels since January on Monday, helped by the Hamas-Iran conflict. This brings 3.866 in the spotlight, but fresh impetus will be required for tackling it. The commodity turns cautious today as IEA sees slower growth and the overbought conditions create risk for pressure back below the 200Days EMA (at around 3.156), However, the downside appears well-protected, with the EMA200 (around 2.840) emerging as the next major support level.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 10 Oct 2023 https://newyork.mfa.ir/portal/NewsView/731039/The-Position-of-the-Islamic-Republic-of-Iran-Regarding-the-Ongoing-Situation-in-the-Occupied-Palestine

2

Retrieved 10 Oct 2023 https://www.state.gov/secretary-antony-j-blinken-with-dana-bash-of-cnns-state-of-the-union-3/

3

Retrieved 10 Oct 2023 https://trumpwhitehouse.archives.gov/briefings-statements/president-donald-j-trump-ending-united-states-participation-unacceptable-iran-deal/

4

Retrieved 21 May 2024 https://www.iea.org/news/after-peak-in-mature-markets-global-gas-demand-is-set-for-slower-growth-in-coming-years

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