Natural gas futures continue to fall after plunging nearly 7% last week; experts see further downside

Natural gas futures declined on August 16 as participants raised their short bets as seen by the open interest. The gas price had plunged 6.93 percent last week on the MCX.

The energy commodity recouped some losses in the afternoon trade after a gap-down start, tracking the muted global cues.

On the MCX, natural gas delivery for August fell Rs 3.10, or 1.07 percent, to Rs 285.30 per mmBtu at 14:28 hours with a business turnover of 10,360 lots.

Gas delivery for September slumped Rs 3.10, or 1.07 percent, to Rs 287 per mmBtu with a business volume of 4,406 lots.

The value of August and September's contracts traded so far is Rs 684.98 crore and Rs 91.47 crore, respectively.

MCX iCOMDEX Natural Gas Index decreased 38.91 points or 1.10 percent to 3,488.44.

NS Ramaswamy, Head of Commodities, Ventura Securities said, “After recording the high of Rs 312, MCX NATURAL GAS prices have been consolidating on the lower side. Prices have broken below the 20-day moving average after a long time. We expect this consolidation to head more on the lower side in coming sessions.”

Ventura Securities

He advised his clients to sell MCX NATURAL GAS AUG below Rs 285 for the target of Rs 265-255 with a stop loss above Rs 305.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, “The price has formed a Descending broadening wedge pattern on intraday charts and last sessions remained within a channel with some upside correction following Thursday’s inventory report by Department of Energy. Overall, the trend will remain marginally bearish in upcoming sessions if price breaks below support low of this week, we may anticipate a move towards Rs 280-270.”

Technicals

The commodity has been trading higher than 50, 100 and 200 days' moving averages but lower than the 5 and 20 days’ moving averages on the daily chart. The momentum indicator RSI is at 46.32, which suggests a bearish movement in the price.

At 0907 GMT, the natural gas price declined 0.31 percent at $3.84 per mmBtu in New York.

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