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Natural gas futures firm, trading above major averages

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.

Mumbai / August 27, 2021 / 04:10 PM IST

Natural gas futures traded firm on August 27 after a sharp rally in the previous session on a lower-than-expected inventory build. Gas prices had risen 7.3 percent yesterday on the NYMEX.

After a gap-up start in the afternoon session, the energy commodity traded in the positive territory tracking bullish overseas cues.

On the MCX, natural gas delivery for September gained Rs 1.20, or 0.38 percent to Rs 313.70 per mmBtu at 14:46 hours with a business turnover of 20,333 lots.

Gas delivery for October climbed Rs 0.60, or 0.19 percent, to Rs 317.90 per mmBtu with a business volume of 4,566 lots.

The value of September and October's contracts traded so far is Rs 1,106.08 crore and Rs 63.28 crore, respectively.

Close

MCX iCOMDEX Natural Gas Index marginally rose 3.65 points or 0.10 percent to 3,803.36.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have traded in the green this Friday early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in a range of $4.10-$4.35 levels.”

"On the domestic front, MCX Natural Gas August holds strong support near Rs 311-308 levels. Resistance is at Rs 315-318 levels,” Iyer stated.

The gas price gave a breakout yesterday after trading in a narrow band of $3.8-4/mmBtu in the last few days.

The US Energy Information Administration (EIA) reported that the country's natural gas inventories rose by 29 billion cubic feet (Bcf) for the week ended August 20 against market expectations of a 40 Bcf build.

Natural gas in storage was 2,851 Bcf as of Friday, August 20, 2021, according to the Department of Energy.

Also, supporting the gas price was tropical storm Ida heading towards US Gulf Coast and is on course to slam into Louisiana, which could boost Henry Hub prices.

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 65.28, which suggests a buy in the price.

Natural gas rallied sharply however it is more of an aberration associated with contract expiry hence we recommend caution in creating a fresh long position at such elevated levels. Focus may continue to be on US weather, storm activity and trend in energy prices, said Kotak Securities.

At 0909 GMT, the natural gas price was up 0.62 percent at $4.23 per mmBtu in New York.

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Sandeep Sinha
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