Natural gas futures rise on Carribbean cyclone 'Six' and warm weather

Natural gas futures jumped on August 11 on warm weather and tropical cyclone Six formed in the Caribbean. The gas price had soared 0.71 percent yesterday on the NYMEX.

The energy commodity extended gain after a gap-up start in the afternoon session, tracking the strong global cues.

On the MCX, natural gas delivery for August gained Rs 2, or 0.66 percent, to Rs 305.90 per mmBtu at 14:50 hours with a business turnover of 13,752 lots.

Gas delivery for September rose Rs 2, or 0.65 percent, to Rs 307.50 per mmBtu with a business volume of 3,070 lots.

The value of August and September's contracts traded so far is Rs 594.84 crore and Rs 59.54 crore, respectively.

MCX iCOMDEX Natural Gas Index was up 24.99 points or 0.67 percent to 3,714.04.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have started higher this Wednesday morning and early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in a range of $3.950-$4.220 levels.”

On the domestic front, MCX Natural Gas August contract holds strong support near Rs 302-299 levels. Resistance is at Rs 306-309 levels”, Iyer noted.

The weather is expected to be warmer than normal throughout most of the north part of the United States for the next 2-weeks.

A second storm has come off the coast of Africa that has a 10 percent of becoming a tropical cyclone in the next 48 hours.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, “MCX Natural gas prices rebounded as tropical cyclone Six formed in the Caribbean and also a second storm has come off the coast of Africa that has a 10% chance of becoming a tropical cyclone in next 48 hours. The weather in most of the northern United States is expected to be warmer than usual for the next two weeks. This is projected to increase cooling demand throughout most of northern America. Rs 310-312 will act as resistance while Rs 297-298 act as support for the day.”

Technicals

The commodity has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving averages on the daily chart. The momentum indicator RSI is at 63.18, which suggests upbeat movement in the price.

At 0933 GMT, the natural gas price rose 0.49 percent at $4.10 per mmBtu in New York.

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