Natural gas futures decline ahead of inventory report, trade above major averages

Natural gas futures traded lower on July 21 as the market players await Energy Information Administration (EIA) weekly inventory report later in the day. The gas prices had jumped 2.1 percent yesterday on the NYMEX.

The energy commodity recouped earlier losses to trade in red after a gap-down start, tracking muted overseas cues.

On the MCX, natural gas delivery for July slipped Rs 2, or 0.68 percent, to Rs 292.10 per mmBtu at 14:33 hours with a business turnover of 11,149 lots.

Gas delivery for August fell Rs 1.90, or 0.65 percent, to Rs 291 per mmBtu with a business volume of 9,423 lots.

The value of July and August's contracts traded so far is Rs 337.19 crore and Rs 365.26 crore, respectively.

MCX iCOMDEX Natural Gas Index declined 20.77 points or 0.58 percent to 3,558.84.

Kotak Securities said natural gas has rallied sharply in the last few days in expectations of higher cooling demand amid hot weather in the US and higher demand for US LNG exports amid higher global prices. The rally came to a halt as the price closed at the key $4/mmBtu level.

Market players are positioning for EIA weekly inventory report. The Department of Energy is expected to note a 44 Bcf jump in US gas inventory against a 5-year average increase of 36 Bcf.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “The natural gas price is trading sideways mode above the support of psychological mark of Rs 290. The price has remained in a tight range of Rs 292-295 in the previous session.”

Technicals

The commodity has been trading higher than 5, 20, 50, 100 and 200-days’ simple moving averages and exponential moving averages on the daily chart. The momentum indicator RSI is at 72.65, which suggests bullish movement in the price.

At 09:12 GMT, the natural gas price dropped 0.76 percent at $3.92 per mmBtu in New York.

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