Natural Gas On MCX Settled Down -0.26%

On MCX settled down -0.26% at 193.20 slid to the lowest level since mid-March, after the latest U.S. weather model called for mild temperatures over the next two weeks, which should reduce heating 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 have tumbled by more than 10 percent since late May as hedge funds start to liquidate a near-record bullish position accumulated in the expectation of a tighter market that failed to materialise. 

Hedge funds and other money managers reduced their combined net long position in the two main futures and options contracts linked to Henry Hub prices by 584 billion cubic feet in the week to May 30.

Fund managers reduced their net long position by the largest amount in any one week since November 2016, after raising it by a cumulative 1,721 bcf during the previous 12 weeks. While expectations are high that prices are being supported by the news that Saudi Arabia and key allies cut ties today with Qatar, the world’s top seller of liquified natural gas. According to Reuters, Saudi Arabia, as well as the UAE, Egypt and Bahrain, said they would sever all ties including transport links with Qatar due to accusations that the country supports extremism.

Qatar supplies roughly a third of global liquified natural gas and both the UAE and Egypt are both highly reliant on Qatar gas. Technically market is getting support at 189.6 and below same could see a test of 186.1 level, And resistance is now likely to be seen at 196.5, a move above could see prices testing 199.9.

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Suhani Verma

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