Natural gas futures were steady at Rs 186.80 per mmBtu on March 26 tracking positive global cues. Natural gas price had risen 1.9 percent yesterday on the NYMEX.
The energy commodity recovered losses and traded in the green territory after a gap-down start in the afternoon.
The commodity has been trading higher than 5 and 200 days' moving averages but lower than the 20, 50 and 100 days’ moving average on a daily chart for the April contract. The Relative Strength Index (RSI) is at 47.31 which indicates bearish momentum in the prices.
The US Energy Information Administration (EIA) reported that US natural gas inventories decreased by 36 billion cubic feet (Bcf) for the week ended March 19 against market expectation of 25 Bcf decline. Natural gas in storage was 1,746 Bcf as of March 19.
According to the National Oceanic Atmosphere Administration, the weather is expected to be warmer than normal over the next 8-14 days.
“While the sell-off has dented market sentiment, natural gas has managed to close higher for the last few trading sessions showing some renewed buying interest. The sharp sell-off in natural gas narrowed the gap between the US coal and gas prices and this has increased attractiveness to use natural gas for power generation,” said Madhavi Mehta, Bullion and Energy Analyst at Kotak Securities.
“Overall, natural gas has fallen too sharply however lower price has increased its demand in the US and global market hence we expect to see some recovery in prices,” Mehta added.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures moved higher this Thursday morning and early afternoon in Asian trade, following a larger than expected draw in natural gas stockpiles. Technically, NYMEX Natural Gas could trade in a range of $2.45-2.65 levels.”
“Technically, MCX Natural Gas March resistance is at Rs 189 and Rs 193 levels and supports are at Rs 185 and Rs 182,” Iyer added.
MCX iCOMDEX Natural Gas Index was up 6.48 points or 0.26 percent to 2,479.98.
In the futures market, natural gas for March delivery touched an intraday high of Rs 187.10 and an intraday low of Rs 185.50 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 gained Rs 0.20, or 0.11 percent, to Rs 186.80 per mmBtu at 14:37 hours IST with a business turnover of 3,998 lots.
Natural gas delivery for April soared Rs 0.40, or 0.21 percent, to Rs 191.30 per mmBtu with a business volume of 13,568 lots.
The value of March and April’s contracts traded so far is Rs 176.49 crore and Rs 224.96 crore, respectively.
Mehta said the price has given an upside break out from the inverse head and shoulder pattern suggesting the bullish trend. As per the trend, expected target is around Rs 201.50, however, a close below Rs 182.50 will negate the bullish view.
Bollinger Bands expansion along with the Relative Strength Index (RSI) is above 60 favouring the bulls. We recommend buying around Rs 190.50 for the target of Rs 201.50 with a protective stop loss below Rs 182.50.
At 09:12 (GMT), the natural gas price jumped 0.39 percent quoting at $2.58 per mmBtu in New York.
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