MCX Natural Gas may trade in range of 192-199.4
Commodity Online | September 20 2016
UPDATED 15:29:16 IST

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Natural Gas on MCX settled down -1.26% at 195.50 on profit booking after prices gained more than 5% last week to close the week at 198 level. Yesterday prices dropped but held near the highest level in almost three-months amid forecasts for warmer than normal temperatures across most parts of the continental U.S. in the days ahead. Lastweek prices gained after the news that cooling degree days have continued to mount in states where natural gas is most heavily used for power generation vs. the population-weighted indicators.

Support also has been seen after Hurricane Hermine impacted natural gas demand in the week ending September 9th, as power grids were affected in Florida, Georgia and the Carolinas. As a result, storage build by 62bcf, ending the week at 3.499 bcf, 5.6% higher than a year ago. Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

But with autumn due to start on September 22, power burns to feed air conditioning demand have probably peaked for now. Total U.S. natural gas in storage currently stands at 3.499 trillion cubic feet, according to the U.S. Energy Information Administration, 5.3% higher than levels at this time a year ago and 8.6% above the five-year average for this time of year.

Unless intense late-summer heat boosts demand from power plants, stockpiles could possibly test physical storage limits of 4.3 trillion cubic feet at the end of October. Technically market is under long liquidation and getting support at 193.8 and below same could see a test of 192 level, and resistance is now likely to be seen at 197.5, a move above could see prices testing 199.4.

Trading Ideas:
--Natural Gas trading range for the day is 192-199.4.
--Natural Gas dropped on profit booking from the highest level amid forecasts for warmer than normal temperatures
--Despite the recent rally, gains are likely to remain limited as traders react to the reality that higher summer demand is coming to an end.
--Total U.S. natural gas in storage currently stands at 3.499 trillion cubic feet, according to the US EIA

Courtesy: Kedia Commodities