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Natural gas futures slip 0.75% to Rs 199.20 per mmBtu on lower inventory drawdown

Moneycontrol logo Moneycontrol 05-03-2021 Sandeep Sinha
Natural gas futures slip 0.75% to Rs 199.20 per mmBtu on lower inventory drawdown © Sandeep Sinha Natural gas futures slip 0.75% to Rs 199.20 per mmBtu on lower inventory drawdown

Natural gas futures fell to Rs 199.20 per mmBtu on March 5 as participants increased their short positions as seen by the open interest. The price of gas had declined 2.5 percent yesterday on the NYMEX.

The energy traded in the negative territory after a gap-down start in the afternoon session tracking weak global cues.

The commodity has been trading lower than 5, 20, 50 and 100 days' moving averages but higher than the 200-day moving average on a daily chart. The Relative Strength Index (RSI) is at 43.73 which indicates negative momentum in prices.

The US Energy Information Administration (EIA) reported that US natural gas inventories dropped by 98 billion cubic feet (Bcf) for the week ended February 26 against market expectation of 136 Bcf decline.

Natural gas prices were also weighed down by improving US gas production and prediction of mild weather in the US reducing heating demand.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have started weak this morning and early afternoon in Asian trade. Technically, NYMEX Natural Gas could trade in the range of $2.50-2.90 levels.”

MCX March Natural Gas holds resistance near Rs 206-209 levels and support near Rs 198-194 levels, he said.

MCX iCOMDEX Natural Gas Index was down 19.26 points or 0.75 percent to 2,624.39.

In the futures market, natural gas for March delivery touched an intraday high of Rs 200.8 and an intraday low of Rs 198.10 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 175 and a high of Rs 222.20.

Natural gas delivery for February slipped Rs 1.50, or 0.75 percent, to Rs 199.20 per mmBtu at 14:46 hours IST with a business turnover of 11,063 lots.

Natural gas delivery for April edged lower by Rs 1.80, or 0.88 percent, to Rs 202.20 per mmBtu with a business volume of 2,248 lots.

The value of March and April’s contracts traded so far is Rs 473.31 crore and Rs 26 crore, respectively.

Kshitij Purohit, Product Manager, Currency and Commodities, CapitalVia Global Research Limited, said, “The weather is expected to remain mild across the mid-west and the east coast, which has put downward pressure on prices. Natural gas has support at Rs 192. Below it, the price may come down to 186 levels. The resistance for the energy is Rs 206, and above this, natural gas can go towards Rs 213 levels.”

While sentiment has weakened, we expect the price to hold near $2.7/mmBtu levels as tightness in the US market may lend some support to prices, said Kotak Securities.

At 09:23 (GMT), the natural gas price was down 0.98 percent quoting at $2.71 per mmBtu in New York.

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