Natural gas prices have continued to witness selling pressure despite higher demand for cleaner gas. In the July outlook, EIA expects prices to average $2.50/MMBtu in 2019 and 2.75/MMBtu in 2020
Precious metal prices continued its buying spree for the third straight week with Comex Gold prices up 0.8 percent and silver prices holding well with 1 percent gains over last one week. Next week’s upcoming FOMC minutes could give new insight with whether the Fed is being more dovish over interest rate policy.
Base metal complex traded within tight range last week on rising possibilities of a trade conflict resolution between the US and China. Certain metal prices like zinc, nickel and aluminium gave a pullback of at least 2 percent while copper and lead suffered losses.
Crude oil prices got temporary support due to tight OPEC policy, however, the broader context remains bearish. Nymex natural gas lately has bounced back on lower than expected inventory addition last week.
Natural gas stocks currently stand at 2.738 tcf, 4 percent lower than the five -year average. There are higher probabilities that the inventory may easily jump to reach 3.7 tcf by the end of October.
Natural gas inventories have started the injection period with 30 percent below the five-year average. The current pace of inventory addition is narrowing the supply deficit every week. Though in a structural sense, a record high production and forecast over increasing output through 2020 will keep the supply pace balance with the rising demand.
Natural gas prices have continued to witness selling pressure despite higher demand for cleaner gas. In the July outlook, EIA expects prices to average $2.50/MMBtu in 2019 and 2.75/MMBtu in 2020.
Record high production and rising inventory had made the natural gas prices test lows of 2016. But cyclically, rising natural gas prices are required to keep the current pace of higher supply to fulfil the rising global demand in 2020.
We expect MCX Natural gas prices to remain supported at Rs 150 per MMBtu and extend the rally towards Rs 175 per MMbtu in the very short term.
The author is a Commodity Analyst at Narnolia Financial Advisors.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.