Natural gas traded higher on month on month basis and managed to touch almost $6/mmbtu. However the counter was unable to sustain at higher levels and has taken a significant fresh step to the downside as ongoing concerns about record high storage and the quiet 2009 Hurricane season added weight to the downside.
But ongoing autumn refueling and maintenance outages at the nation's nuclear plants continued to underpin prices in most regions. About 27% of the nation's nuclear capacity remained offline for refueling and maintenance that kept nearly 7,000 megawatts more generation offline in the last two weeks of the month which were more than during the same week last year and that could potentially add 1.1 billion cubic feet per day to gas demand.
Furthermore, the U.S. Energy Information Administration, showed total domestic gas inventories hit another all time high, climbing to 3.734 trillion cubic feet with at least two more weeks left in the stock building season.
Elsewhere most investors in the market expect total storage to top out at new highs just above 3.8 tcf by winter, below EIA's recently revised limits of working gas capacity of 3.9 tcf. Gas prices failed to sparkle in the month of October as the market consolidated in a price band spanning 35 rupees.
Such kind of behavior could be expected in a commodity that has come out of a multi month bear phase. Price action usually experiences some sideways action as the search for the final bottom gets underway.
In such a scenario, traders can look towards buying near support levels with a protective monetary stop loss in place. For November, bulls should find it hard to scale past Rs.277- 280/mmbtu range.
Courtesy: Religare Commodities Explore Commodity Online Mobile Services
