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Natural Gas likely to trade between 166.4-179.4 range
Commodity Online | August 16 2016
UPDATED 17:04:37 IST

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Natural Gas on MCX settled up 2.06% at 173.7 on forecasts for scorching eastern heat that would stoke demand for the power-plant fuel. Intense heat has boosted air-conditioner use in the eastern U.S., pushing gas demand for power generation to a record. Still, prices capped a second straight weekly decline on speculation that stockpiles will expand at a faster pace as fall approaches, sending supplies to an all-time high before the winter. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 29 billion cubic feet in the week ended August 5, more than forecasts for an increase of 25 billion.

That compared with a surprise drop of 6 billion cubic feet in the preceding week, 65 billion a year earlier and a five-year average of 53 billion cubic feet. Total U.S. natural gas storage stood at 3.317 trillion cubic feet, 10.9% higher than levels at this time a year ago and 13.3% above the five-year average for this time of year. Hot weather increases demand for gas-powered electricity to run air-conditioning units. Forecasts released Friday called for higher temperatures in the next two weeks, according to Commodity Weather Group LLC, increasing expectations for natural-gas consumption.

Natural Gas rigs continued to mostly sit out the return to activity as the most recent week of Baker Hughes Inc. (BHI) data showed a robust increase in the number of active oil rigs. Technically market is under short covering as market has witnessed drop in open interest by -21.22% to settled at 8619 while prices up 3.5 rupee, now Natural Gas is getting support at 170 and below same could see a test of 166.4 level, and resistance is now likely to be seen at 176.5, a move above could see prices testing 179.4.

Trading Ideas:
--Natural Gas trading range for the day is 166.4-179.4.
--Natural Gas prices gained on forecasts for scorching eastern heat that would stoke demand for the power-plant fuel.
--Still, prices dropped for straight weekly decline on speculation that stockpiles will expand at a faster pace as fall approaches, sending supplies to an all-time high.
--Intense heat has boosted air-conditioner use in the eastern U.S., pushing gas demand for power generation to a record.

Courtesy: Kedia Commodities

Commodity Arrivals Rate
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