Natural gas futures slip on weak global cues

Natural gas futures fell on August 18 as participants raised their short bets as seen by the open interest. The gas price had tumbled 2.76 percent yesterday on the NYMEX.

The energy commodity extended decline after a flat to gap-up start in the afternoon, tracking the weak overseas cues.

On the MCX, natural gas delivery for August slipped Rs 1.40, or 0.49 percent, to Rs 284.00 per mmBtu at 14:20 hours with a business turnover of 11,529 lots.

Gas delivery for September dropped Rs 1.10, or 0.38 percent, to Rs 285.90 per mmBtu with a business volume of 5,751 lots.

The value of August and September's contracts traded so far is Rs 531.60 crore and Rs 106.02 crore, respectively.

MCX iCOMDEX Natural Gas Index decreased 12.16 points or 0.35 percent to 3,477.50.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have turned weak this Wednesday early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in a range of $3.950-$3.950 levels.”

"On the domestic front, MCX Natural Gas August holds strong support near 282-280 levels. Resistance is at 287-290 levels,” Iyer stated.

The weather is expected to be warmer than average for the next two weeks across most of the United States. With temperatures trending slightly warmer than average over the past week, total US consumption of natural gas rose by 2.3 percent, or 1.6 billion cubic feet (Bcf) per day, compared with the previous report week, according to data from the EIA.

US natural gas consumption rises in most sectors, offset by declines in the industrial sector and LNG export terminal pipeline receipts.

Technicals

The commodity has been trading higher than 50, 100 and 200 days' moving averages but lower than the 5 and 20 days’ moving averages on the daily chart. The momentum indicator RSI is at 46.17, which suggests a bearish movement in the price.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Natural gas is trading at Rs 284 levels. If it sustains below Rs 280 levels then could trigger the further selling towards Rs 264 levels in the evening session.”

At 0902 GMT, the natural gas price fell 0.13 percent at $3.83 per mmBtu in New York.

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