Naturalgas on MCX settled up 3.96% at 196.80 on short covering and amid of bullish technical signals just one day before the US EIA is scheduled to release its weekly inventory update. The inventory data will be closely watched in the aftermath of the EIA’s report of a historic build in natural gas stocks in the week ended Feb. 24.
This was only the second time since the EIA began collecting data that there has been an inventory injection in the high demand period of December-January. Another bearish fundamental for natural gas, the EIA on Tuesday reduced its 2017 price forecast for Henry Hub spot prices by 12% due to a warmer winter. The EIA is expecting natural gas demand in February to be its lowest for the month in eight years.
But, new natural gas export capabilities and growing domestic gas consumption will contribute to spot prices increasing to an average $3.45/MMBtu in 2018, the EIA added. Meanwhile market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw of around 59bcf in the week ended March 3.
That compares with a build of 7bcf in the preceding week, a decline of 57 billion a year earlier and a five-year average drop of 136bcf. Total natural gas in storage currently stands at 2.363tcf, according to the US EIA, 7.3% lower than levels at this time a year ago and 12.5% above the five-year average for this time of year.
Meanwhile, traders continued to monitor shifting weather forecasts to gauge demand for the fuel. Technically market is under short covering and getting support at 191.8 and below same could see a test of 186.8 level, And resistance is now likely to be seen at 199.6, a move above could see prices testing 202.4.