Natural gas hits fresh high for February series at Rs 223.20/mmBtu on strong demand

Natural gas futures climbed to Rs 221.80 per mmBtu on February 5 after hitting a fresh high of Rs 223.20 for the February series during intraday trade on the MCX. The price had gained 5.2 percent the previous day on NYMEX.

Natural gas extended gain after a gap up open in the afternoon session, tracking positive global cues.

The US Energy Information Administration (EIA) reported that the natural gas inventories declined by 192 Bcf for the week ended January 29, which is in line with market expectations.

Prices were also supported by the forecast of cold weather in the US in the coming days that will increase heating demand.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said “Natural gas traded positive during the last trading session. The weather is expected to be much colder than normal through all of the US." He recommends buying February futures near Rs 209-209.50 with a stop loss of Rs 206 for a target of Rs 217.

MCX iCOMDEX natural gas index surged 169.61 points, or 6.53 percent, to 2,766.25.

In the futures market, natural gas for February delivery touched an intraday high of Rs 223.20 and an intraday low of Rs 212 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 169 and a high of Rs 223.20.

Natural gas delivery for February gained Rs 13.60, or 6.53 percent, to Rs 221.80 per mmBtu at 1432 hours, with a business turnover of 14,398 lots. Delivery for March edged higher Rs 10.20, or 4.93 percent, to Rs 217.30, with a business volume of 2,750 lots.

The value of February and March’s contracts traded so far is Rs 2,317.09 crore and Rs 77.56 crore, respectively.

Natural gas has witnessed mixed trade in the last few days, which reflects wariness in market players despite the forecast of cold weather in the US. "We may see sustained buying if natural gas manages to sustain above the $3/mmBtu levels. For the day, we recommend market players to wait for lower levels to create fresh long positions," Kotak Securities said.

At 0906 GMT, natural gas was up 2.60 percent, quoting at $3.03 per mmBtu in New York.

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