Natural Gas On MCX Settled Up 1.19%

Naturalgas on MCX settled up 1.19% at 220.4 as cooler forecasts continue raising expectations for increased demand. Baker Hughes reported that the US natural gas rig count rose by two to 118 rigs. The US natural gas rig count rose 1.7% week-over-week, but fell 37.6% year-over-year. The U.S. Energy Information Administration’s weekly update on storage levels showed a fall of 2 billion cubic feet in the week ended Nov. 18, likely from stronger heating demand driven by colder weather.

The shift from building inventories to the season’s first withdrawal is a positive sign for natural gas, which has been under pressure in recent weeks as warmer-than-average weather has persisted in the U.S. Natural gas prices are dependent on weather forecasts because half of U.S. homes use natural gas for heat. Even with the drawdown, storage is still hovering near record high levels. Stockpiles are 1% higher than one year ago, and 6.3% above the five-year average, according to EIA data.

The EIA (U.S. Energy Information Administration) estimates that US natural gas production will fall in the seven shale regions by 94 million cubic feet per day to 46,951 million cubic feet per day in December 2016 compared to the previous month. Production is expected to fall mainly in the Eagle Ford and Niobrara Shale regions during the same period. 

Technically market is under fresh buying as market has witnessed gain in open interest by 69.56% to settled at 2791 while prices up 2.6 rupee, now Naturalgas is getting support at 216.8 and below same could see a test of 213.3 level, And resistance is now likely to be seen at 222.6, a move above could see prices testing 224.9.

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Suhani Verma

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