Natural Gas On MCX Settled Down

Naturalgas on MCX settled down -2.1% at 210 as traders monitored shifting weather forecasts to assess the outlook for early-summer demand and supply levels. Prices of the heating fuel rallied after the latest U.S. weather model called for cooler temperatures through the end of the month, which should increase demand during that time. Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on spring heating demand. Natural gas prices are largely tied to weather forecasts.

However, the latest forecast, which calls for slightly higher than normal natural gas demand in the week ahead, appears to be already priced into the market, given today’s move to the downside. Natural gas prices will likely continue to fluctuate in reaction to upcoming weather forecasts. However, in order for rallies in natural price gains to be sustained, upside movement should be accompanied by rising open interest data.

And, the latest 2-day advance took place amid unsupportive data which clearly show long liquidation as market has witnessed drop in open interest by -17.34% to settled at 4805 while prices down -4.5 rupees. Traders now await the latest natural gas inventories report, which will be released by the US Energy Information Administration.

The latest report showed working gas in storage was 2,369 Bcf as of May 12th, a net increase of 68 Bcf from the previous week, which was above consensus estimates of a build of roughly 61 Bcf. Now technically market is getting support at 207.7 and below same could see a test of 205.4 level, And resistance is now likely to be seen at 213.8, a move above could see prices testing 217.6.

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Suhani Verma

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