Natural Gas On MCX Settled Up 1.35%

Naturalgas on MCX settled up 1.35% at 210.6 on some short covering, but prices dropped by 4.14% on weekly basis amid expectations of a drop in demand, after the latest U.S. weather model predicted mild temperatures over the next two weeks. Also colder than normal weather is expected to spread across most of the United States during the next 8-14 days which will reduce cooling demand during a period when the weather normally heats up. In addition, the forecast over the next week is conducive to higher natural gas prices.

According to natgasweather.com, a strong weather system with rain, mountain snow, and severe thunderstorms will track through the Rockies and Midwest the next few days. Cooler temperatures have also spread across the Great Lakes and Northeast, easing warm conditions. The West will now warm as high pressure gains ground, while cooling becomes focused over the east-central US, spilling at times into the Southeast.

This will continue to drive stronger than normal national natural gas demand. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 68 billion cubic feet in the week ended May 12, above forecasts for a build of 61 billion. That compared with a gain of 45 billion cubic feet in the preceding week, an increase of 73 billion a year earlier and a five-year average rise of 87 billion cubic feet.

Technically market is under fresh buying as market has witnessed gain in open interest by 5.39% to settled at 5574 while prices up 2.8 rupees, now Naturalgas is getting support at 207.4 and below same could see a test of 204.1 level, And resistance is now likely to be seen at 212.8, a move above could see prices testing 214.9.

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Suhani Verma

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