Natural gas futures marginally gain amid lack of fresh trigger; likely to trade choppy

Natural gas futures soared on August 24 as participants raised their bets as seen by the open interest. The gas prices had risen 2.4 percent yesterday on the NYMEX.

The energy commodity traded in the positive territory after a gap-up start in the afternoon session, despite muted global cues.

On the MCX, natural gas delivery for September gained Rs 1.20, or 0.41 percent, to Rs 293.80 per mmBtu at 14:19 hours with a business turnover of 9,133 lots.

Gas delivery for October rose Rs 1.20, or 0.40 percent, to Rs 299.20 per mmBtu with a business volume of 1,717 lots.

The value of September and October's contracts traded so far is Rs 481.51 crore and Rs 17.41 crore, respectively.

MCX iCOMDEX Natural Gas Index advanced 17.02 points or 0.48 percent to 3,574.77.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have turned weaker this Tuesday early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in a range of $3.85-$4.05 levels.”

"On the domestic front, MCX Natural Gas August holds strong support near 289-285 levels. Resistance is at 292-295 levels,” Iyer noted.

In its weekly report, Baker Hughes said the number of rigs drilling natural gas in the US declined by 5 to 97 rigs for the week to August 20.

The gas prices have been supported by the forecast of warm weather for the next 6-10 days and a reduction in US rig count.

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 53.25, which suggests a neutral movement in the price.

Natural gas fell sharply in the last few days but has recovered to re-enter the broad $3.8-4.2/mmBtu range seen for the last few days. We expect choppy trade amid lack of fresh triggers however we may see selling pressure at higher levels as weather forecasts have dampened demand expectation, said Kotak Securities.

At 0857 GMT, the natural gas price was down 0.53 percent at $3.93 per mmBtu in New York.

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