Natural gas futures edge 0.98% lower to Rs 182 per mmBtu; expert suggests sell-on-rise strategy

Natural gas futures dropped to Rs 182 per mmBtu on March 22 as participants increased their short positions as seen by the open interest. The prices had declined by 3.52 percent last week on the MCX.

The energy commodity recovered losses in the afternoon trade after a gap-down start tracking a weak dollar.

The commodity has been trading lower than 5, 20, 50 and 100 days' moving averages but higher than the 200-day moving average on a daily chart for the April contract. The Relative Strength Index (RSI) is at 39.13 which indicates negative momentum in prices.

The number of rigs drilling natural gas in the US remained unchanged at 92 for the week to March 19, said energy services firm Baker Hughes in a weekly report.

Speculators cut their net long natural gas futures and options positions by 72,401 contracts to 211,812 in the week to March 16, according to US CFTC data.

Sunand Subramaniam, Senior Research Associate at Choice Broking said, “We are estimating MCX Natural Gas futures to trade bearish in expectancy of steady supplies, lower demand/usage and fall in inventories observed on a weekly basis. Natural gas inventories have showcased a seasonal fall to 2,264 billion cubic feet, lower compared to previous inventories of 2,275 Bcf.”

“US CPC survey for the next 6-10 days showcases that warmer temperatures are estimated to cover the eastern and central parts of the United States. This is expected to decrease the usage of natural gas for the power sector in the ongoing winter season,” he said.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “Internatioanl natural gas futures have started this morning and early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in the range of $2.35-2.65 levels.”

“Technically, MCX Natural Gas March holds resistance near Rs 188-200 levels and support near Rs 183-181 levels,” he added.

MCX iCOMDEX Natural Gas Index was down 18.14 points or 0.75 percent to 2,398.35.

In the futures market, natural gas for March delivery touched an intraday high of Rs 182.20 and an intraday low of Rs 180 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 175 and a high of Rs 222.20.

Natural gas delivery for March slipped Rs 1.80, or 0.98 percent, to Rs 182 per mmBtu at 14:39 hours IST with a business turnover of 10,072 lots.

Natural gas delivery for April fell Rs 1.30, or 0.70 percent, to Rs 185.20 per mmBtu with a business volume of 6,241 lots.

The value of March and April’s contracts traded so far is Rs 579.09 crore and Rs 60.75 crore, respectively.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “For the upcoming week, traders should adopt a sell-on-rise strategy in MCX natural gas from trendline resistance level of Rs 185-186.50, keeping a stop loss around the previous week’s resistance at Rs 192.50 and chasing a target beyond Rs 170.”

At 09:13 (GMT), the natural gas price declined 0.87 percent quoting $2.51 per mmBtu in New York.

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