Natural gas futures drop 1.53% on subdued global trend

Natural gas futures plunged on August 17 as participants trimmed their positions as seen by the open interest. The gas price had soared 2.2 percent yesterday on the NYMEX.

The energy commodity extended fall in the afternoon session after a gap-down start, tracking the subdued global trend.

On the MCX, natural gas delivery for August dropped Rs 4.50, or 1.53 percent, to Rs 290.10 per mmBtu at 14:39 hours with a business turnover of 8,783 lots.

Gas delivery for September decreased Rs 4.30, or 1.45 percent, to Rs 291 per mmBtu with a business volume of 4,489 lots.

The value of August and September's contracts traded so far is Rs 960.16 crore and Rs 135.30 crore, respectively.

MCX iCOMDEX Natural Gas Index declined 48.63 points or 1.35 percent to 3,552.89.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have turned weak this Tuesday early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in the range of $3.850-$4.100 levels.”

"On the domestic front, MCX Natural Gas August contract holds strong support near Rs 292-288 levels. Resistance is at Rs 297-300 levels,” Iyer noted.

The gas prices were impacted by mixed weather forecasts and uncertainty about the impact of increased storm activity in the Atlantic.

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 50.04, which suggests neutral movement in the price.

The base trend for natural gas is positive owing to the tighter US and the global market; however, price is stuck in the $3.8-4.2/mmBtu range amid a lack of fresh triggers, said Kotak Securities.

At 0920 GMT, the natural gas price was down 1.06 percent at $3.90 per mmBtu in New York.

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