Natural gas futures flat amid lack of fresh cues

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Natural gas futures traded steady on September 7 amid a lack of fresh triggers as the US market was closed yesterday on account of the Labour Day Holiday.

The energy commodity swing between profits and losses after a flat to negative start in the afternoon session.

On the MCX, natural gas delivery for September marginally eased 0.10, or 0.03 percent to Rs 343 per mmBtu at 14:35 hours with a business turnover of 14,684 lots.

Gas delivery for October was flat at Rs 347.80 per mmBtu with a business volume of 5,053 lots.

The value of September and October's contracts traded so far is Rs 518.35 crore and Rs 38.17 crore, respectively.

MCX iCOMDEX Natural Gas Index slightly fell 1.21 points or 0.03 percent to 4,170.57.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “Due to the recent heatwave in the United States, the possible damage from Hurricane Ida, and of course, Russia’s decision not to transport as much gas to the European Union, natural gas markets have been out of control. All of this is starting to wreak havoc on the supply/demand balance, but it’ll only be a matter of time before supply catches up.”

Purohit further added “That looking at the chart from a purely technical basis, one can see that we are overbought. This isn’t to suggest that we can’t go higher, it just means we’re in desperate need of a pullback to keep the momentum going.”

Market players continue to evaluate the demand-supply impact of the storm activity. The production in the Gulf of Mexico region is being started at a slower pace as parts of the US faces power outages.

Approximately 80.78 percent of the Gulf of Mexico gas production remained closed as of September 6, according to the US Bureau of Safety and Environmental Enforcement.

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 Relative Strength Index (RSI) is at 74.22, which indicates a buy in the price.

Natural gas may witness choppy trade amid lack of fresh triggers however slow production recovery in the US may keep prices supported, said Kotak Securities.

At 0918 GMT, the natural gas price was down 0.53 percent at $4.66 per mmBtu in New York.

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