Natural gas prices declined 0.32 percent this week to settle at Rs 217.30 per mmBtu on the MCX. The energy price rose during three out of five trading sessions on the domestic bourse.
The commodity has been unable to break out or break down after a less-than-anticipated build in US gas stockpiles, as reported by Energy Information Administration (EIA).
It has been trading higher than its 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 60.70, which indicates upbeat momentum in the prices.
The EIA reported that the US' natural gas inventories increased by 60 billion cubic feet (Bcf) for the week ended April 30 as against market expectations of a 64 Bcf rise. Natural gas in storage was 1,958 Bcf as of April 30, 2021.
In its weekly report, Baker Hughes said the number of rigs drilling natural gas in the US rose by 7 to 103 rigs for the week to May 5.
Natural gas demand for the residential sector increased to 90.5 billion cubic feet (Bcf) per day compared to 90.4 Bcf in the preceding week, while the industrial sector has been lower at 21.9 Bcf/d on a weekly basis, according to PointLogic Energy.
“Fundamentally for the weeks ahead, we are estimating MCX Natural Gas futures to trade volatile in expectancy of steady supplies, mixed demand/usage and a small rise in inventories observed on a weekly basis," said Sunand Subramaniam, Senior Research Associate, Choice Broking.
Subramaniam also said the US CPC further expects extreme weather conditions for the next 6-10 days in this spring season which is expected to bring in a mixed trend in prices during the week ahead. "Overall, we expect a sideways trend in MCX Natural Gas in the coming week," Subramaniam noted.
MCX iCOMDEX Natural Gas Index was up 17.52 points or 0.65 percent to end at 2,715.42.
In the futures market, natural gas for May delivery touched an intraday high of Rs 219.10 and an intraday low of Rs 213.40 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 184.10 and a high of Rs 222.90.
Natural gas delivery for May gained Rs 1.70, or 0.79 percent to settle at Rs 217.30 per mmBtu with a business turnover of 17,188 lots.
Natural gas delivery for June rose by Rs 1.50, or 0.68 percent, to close at Rs 221.30 per mmBtu with a business volume of 2,908 lots.
The value of May and June’s contracts traded on Friday was Rs 5,448.92 crore and Rs 180.67 crore, respectively.
Natural gas price settled with a gain of 1.50 percent at $2.97 per mmBtu in New York.
Next Week Outlook
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: Traders should keep an eye on the sell-on-rise opportunity in MCX Natural gas futures from the resistance level of around Rs 209. For this sell position, traders should keep a stop loss of around Rs 211.50 and aim the target beyond Rs 197.50 for the coming week.
Rationale: MCX Natural gas price showed a negative sign on Friday and not made an “inside bar” pattern on daily charts. In the United States, we will see temperatures as high as 82°F, and that will almost certainly wear down the demand for the market. Furthermore, the 211 - 212 level is obvious resistance for the market.
Sriram Iyer, Senior Research Analyst at Reliance Securities
“Natural gas prices could continue to remain range bound next week. Investors will await cues on the weather and inventories next week before taking a call on prices.”
“Technically, NYMEX Natural Gas could trade in a range of $2.700-$3.330 levels. Domestically, MCX Natural Gas May could see a sideways to marginal Bullish momentum in coming week where 223-232 levels will hold a resistance and support is at 212-206 levels.” “Iyer advised his clients to buy natural gas on dips near Rs 214 with a stop loss of Rs 210 and a target of Rs 222”
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