MCX Natural Gas under short covering; Support seen at 122.6
Commodity Online | July 23 2020
UPDATED 10:00:51 IST

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Technically Natural Gas market is under short covering as market has witnessed drop in open interest by 9.07% to settled at 13548 while prices up 1.8 rupees.

Now MCX Natural Gas is getting support at 122.6 and below same could see a test of 119.2 levels, and resistance is now likely to be seen at 128.1, a move above could see prices testing 130.2.

Natural Gas yesterday settled up by 1.45% at 126.1 recovered on forecasts for the heat wave blanketing much of the country to continue through early August, keeping air-conditioning demand strong.

Data provider Refinitiv projected U.S. demand, including exports, will hold around 92.7 billion cubic feet per day (bcfd) and next. The outlook for next week was lower than Refinitiv's forecast.

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 neighbouring 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.

Pipeline exports to Mexico averaged 5.60 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.

Refinitiv said production in the Lower 48 U.S. states averaged 88.3 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.

Trading Ideas:
--Natural Gas trading range for the day is 119.2-130.2.
--"Natural Gas recovered on forecasts for the heat wave blanketing much of the country to continue through early August, keeping air-conditioning demand strong.
--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