Gas likely to rise on EIA stock withdrawal

AHMEDABAD (Commodity Online): Natural gas opened slightly down this morning and fell further. Gas wiped off yesterday’s early gains and settled flat at 276.6. Presently at 2.45 pm, MCX Jan Natural gas traded at 273.6 per one MMBTU, down by 3 rupees from yesterday’s close.

Natural gas has risen by more than 33 percent within last 21 days. Natural gas is likely to go up on cold US weather. As per EIA report, Natural Gas stock has declined by more than 11 percent within last four weeks. Cold weather and expectation of additional withdrawal in natural gas stock support gas prices.

According to Walter Zimmermann, Chief Technical Analyst at United-ICAP, the two most important longer-term technical factors for the strip in Natural Gas are:
1. The 13.340 to 4.390 decline can only be counted as a five wave move
2. The rebound from 4.390 can only be counted as an -ABC- type

This means the 13.340 to 4.390 decline was the initial leg down in a continuing down trend and the rebound from 4.390 is a bear market correction - not the resumption of a longer term up trend, according to Zimmermann.

“Our minimum near term target is the 6.500 to 6.730 zone. And the next step up from there is the 7.810 - 7.850 area. So the near term outlook is higher while the longer-term outlook is still pointing down,” he further added.

In MCX, technical range for Natural Gas is from 260-282. 14-day RSI for gas is at 64 level which is not in overbought zone, indicates that still sufficient room for gas prices to move up. Currently gas future is trading above 7 and 14 day weighted moving average, which also suggests prices, may move up.