Natural gas futures climbed higher for the sixth straight day as participants increased their long position as seen by the open interest. The gas prices have surged 24.48 percent so far in June on the MCX and touched a high of $3.81/mmBtu on NYMEX, the highest level since December 2018.
The commodity's price traded in the positive territory after a gap-up start, tracking a strong global trend.
On the MCX, natural gas delivery for July soared by Rs 3.40, or 1.25 percent, to Rs 276.20 per mmBtu at 14:58 hours with a business turnover of 18,585 lots.
Gas delivery for August gained Rs 3.40, or 1.25 percent, to Rs 275.10 per mmBtu with a business volume of 1,840 lots.
The value of July and August's contracts traded so far is Rs 1,629.25 crore and Rs 124 crore, respectively.
MCX iCOMDEX Natural Gas Index increased 38.98 points or 1.17 percent to 3,362.06.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Natural is trading with positive momentum since last five consecutive sessions, breaking above multiple resistance levels. The price has tested the high of Rs 283.60 in the previous session and indicated some exhaustion attributes in momentum. Overall trend is still marginally positive and key support holds near Rs 270 in the intraday chart.”
Natural gas speculators are holding a huge net short position and this may have made natural gas vulnerable to short covering.
The gas prices were supported by an increase in US LNG exports amid firm global gas and crude prices along with hot weather in the United States increasing cooling demand.
Natural gas momentum remains positive on expectations of higher demand; however, the recent gains have been too sharp and in a too short span of time so some caution is recommended, said Kotak Securities.
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 80.00, which suggests some correction may take place in the price.
At 09:39 GMT, the natural gas price was up 1.93 percent at $3.69 per mmBtu in New York.
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