MCX Natural Gas under short covering; Support seen at 121.9
Commodity Online | July 22 2020
UPDATED 10:00:53 IST

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Technically Natural Gas market is under short covering as market has witnessed drop in open interest by 11.84% to settled at 14899 while prices up 1.1 rupees.

Now MCX Natural Gas is getting support at 121.9 and below same could see a test of 119.5 levels, and resistance is now likely to be seen at 126.2, a move above could see prices testing 128.1.

Natural Gas yesterday settled up by 0.89% at 124.3 as power generators burned record amounts of gas this week to keep air conditioners humming during the hottest part of a heat wave blanketing much of the country.

Refinitiv said production in the Lower 48 U.S. states averaged 88.3 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November.

As consumers crank up their air conditioners, Refinitiv forecast U.S. demand, including exports, will rise from 92.3 bcfd this week to 93.6 bcfd next week. That, however, was a little lower than Refinitiv's outlook.

Pipeline gas flowing to U.S. LNG export plants averaged 3.4 bcfd (35% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February.

Utilization was about 90% in 2019. U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners. Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December.

U.S. natural gas storage is expected to end the April-October injection season at a record 4.114 trillion cubic feet (tcf) around Oct. 31 as the coronavirus cuts demand before producers have a chance to reduce output.

Trading Ideas:
--Natural Gas trading range for the day is 119.5-128.1.
--Natural Gas rose as power generators burned record amounts of gas to keep air conditioners humming.
--Refinitiv said production in the Lower 48 U.S. states averaged 88.3 billion cubic feet per day (bcfd) so far in July, up from a 20-month low.
--U.S. natural gas storage is expected to end the April-October injection season at a record 4.114 trillion cubic feet (tcf) around Oct. 31.

Courtesy: Kedia Commodities