Natural Gas on MCX settled up 1.07% at 198 after weather reports suggested more heat and high demand for gas-fired power throughout September. Historic heat that caused record demand for gas-fired power and declining drilling activity have persuaded many to bet a glut will ease and lift prices. A weekly storage update showed a smaller-than-normal addition to storage for this time of year. That has happened frequently this summer, a big reason for the rally.
A surplus in storage, once about 50% higher than last year’s levels or the five-year average, has narrowed compared to past years. As of Sept. 9, U.S. natural gas stockpiles totaled 3.5 trillion cubic feet, 5.6% above levels from a year ago and 9.3% above the five-year average for the same week, the U.S. Energy Information Administration said. The U.S. natural gas market is well on the way to rebalancing as unusually high airconditioning demand coupled with strong underlying consumption growth absorbs the record inventories left at the end of last winter.
Anticipating a tighter market in 2017, hedge funds and other money managers amassed the largest net long position in natural gas futures and options for more than two years by the end of August. Gas stocks are likely to enter the winter reasonably close to the long-term average and underlying gas demand is growing as more gas-fired power plants enter service and the existing fleet operates for more hours. Technically market is under fresh buying as market has witnessed gain in open interest by 10.9% to settled at 9536 while prices up 2.1 rupee, now Natural Gas is getting support at 194 and below same could see a test of 189.9 level, and resistance is now likely to be seen at 200.5, a move above could see prices testing 202.9.
--Natural gas trading range for the day is 189.9-202.9.
--Natural gas prices gained after weather reports suggested more heat and high demand for gas-fired power throughout September.
--A weekly storage update showed a smaller-than-normal addition to storage for this time of year.
--Natural gas stockpiles totaled 3.5 trillion cubic feet, 5.6% above levels from a year ago and 9.3% above the five-year average for same week.
Courtesy: Kedia Commodities