Natural gas futures jump on dip buying, higher demand

The value of August and September's contracts traded so far is Rs 591.13 crore and Rs 386.91 crore, respectively.

Natural gas futures climbed on August 20 as participants rolled over their bullish bets as seen by the open interest. The gas prices had fallen 0.57 percent yesterday on the NYMEX.

The energy commodity extended gained after a gap-up start in the afternoon session, tracking the firm global trend.

On the MCX, natural gas delivery for August rose Rs 7, or 2.46 percent, to Rs 291.50 per mmBtu at 14:38 hours with a business turnover of 7,018 lots.

Gas delivery for September jumped Rs 7, or 2.45 percent, to Rs 293 per mmBtu with a business volume of 6,960 lots.

The value of August and September's contracts traded so far is Rs 591.13 crore and Rs 386.91 crore, respectively.

MCX iCOMDEX Natural Gas Index increased 85.11 points or 2.45 percent to 3,562.61.

Kotak Securities said natural gas edged up on dip buying and robust US LNG exports and cooling demand in the United States. However, it added that weakness in crude oil price and concerns about the US economy amid mixed economic data and rising coronavirus cases has also pressurised prices.

The US Energy Information Administration (EIA) reported that the country's natural gas inventories rose by 46 billion cubic feet (Bcf) for the week ended August 13 against market expectations of a 31 Bcf rise. 

S&P Global Platts said India's LNG demand could rebound to pre-COVID-19 levels by early 2022 as its economy recovers, provided spot LNG prices soften and the country can repel any subsequent waves of COVID-19 infections.

The South Asian country has emerged as a key participant in the LNG market place and despite being price-sensitive, it has set the floor for spot LNG prices by picking up cargoes every time prices begin to drop, it added.

Technicals

The commodity has been trading higher than 5, 50, 100, and 200 days' moving averages but lower than the 20-day moving averages on the daily chart. The momentum indicator RSI is at 51.06, which suggests a neutral movement in the price.

At 09:22 GMT, the natural gas price soared 2.14 percent at $3.91 per mmBtu in New York.

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