Natural gas futures climb over 6% on firm global trend, analysts say adopt buy on dips strategy

Natural gas futures surged on October 25 as participants rolled over their bullish bet as seen by open interest. November series gas price had tumbled 4.51 percent last week on the MCX.

The energy commodity traded in the green since morning, tracking the bullish overseas cue.

On the MCX, natural gas delivery for October climbed Rs 24, or 6.12 percent, to Rs 416.10 per mmBtu at 2.31 pm with a business turnover of 1,470 lots.

Gas delivery for November soared by Rs 22.40, or 4.49 percent, to Rs 430.10 with a business volume of 4,398 lots.

The value of October and November contracts traded, so far, stood at Rs 265.09 crore and Rs 543.77 crore, respectively.

MCX Enrgdex advanced by 136 points or 2.10 percent at 6,624 at 2.34 pm. The index tracks the real-time performance of MCX Crude Oil and MCX Natural Gas futures.

NS Ramaswamy, Head of Commodities, Ventura Securities said, “MCX NATURAL GAS prices have consolidated from recent highs. Prices are likely to continue the primary trend on the upside in coming sessions. Strong support for the prices is seen at Rs 370 level on a closing basis. Any dip in prices can be used to go long for the coming sessions.”

Ventura Securities

He advised his clients to buy MCX NATURAL GAS NOVEMBER in the range of Rs 395 to Rs 400 for the target of Rs 430 - Rs 450 with a stop loss below Rs 380.

“MCX Natural gas future has been traded back and forth during last week, made a low of Rs 365 and settle near Rs 394. The price has formed a descending triangle pattern on the hourly chart and the past few sessions remained within a channel. The price has been edged higher towards the end of the week but unable to break through the resistances,” said Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited.

Purohit stated that MCX Natural Gas future will likely continue its sideways momentum and traders should keep an eye on buying opportunities around Rs 383 - Rs 385, with the stop loss of Rs 374.90 for the targets of Rs 405.

The CFTC data showed that money managers cut their speculative net long positions by 22,990 lots last week.

In its weekly report, Baker Hughes said the number of rigs drilling natural gas in the US rose by 1 to 99 for the week to October 22.

Technicals

The commodity has been trading higher than 5, 20, 50, 100, and 200-day simple and exponential moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 58.59, which indicates an upbeat movement in price.

At 9.15 am GMT, the natural gas price gained 4.89 percent to $5.72 per mmBtu in New York.

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