Commodity Trading Tips for Natural Gas by Kedia Commodity

Ajay Kumar Kedia 13 August 2013

Naturalgas yesterday settled up 4.55% at 204.30 rallied as forecasts for late this week and early next week turned warmer, boosting near-term demand expectations for the heating fuel. Updated weather forecasting models pointed to hotter-than-normal temperatures in the northern tier of the US from August 17 through August 26, boosting summer cooling demand for the fuel. Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Some bargain buying also contributed to gains, as traders returned to the market to seek cheap valuations after prices fell to the lowest level since February last week. Nymex gas prices fell to USD3.133 per million British thermal units on Thursday, the lowest level since February 15. Prices has lost nearly 14% over the past three weeks, the biggest three-week drop in eight months, amid concerns over rising inventories and lingering below normal temperatures in the key Midwest and Eastern US markets. Total US natural gas storage stood at 2.941 trillion cubic feet as of last week, 0.7% above the five-year average and rising to a surplus for the first time since March. Early injection estimates for this week's storage data range from 62bcf to 77bcf, compared to a 20bcf increase during the same week a year earlier. The five-year average for the week is a build of 42bcf. Technically market is under short covering as market has witnessed drop in open interest by -12.65% to settled at 8557 while prices up 8.9 rupee, now Naturalgas is getting support at 198.40 and below same could see a test of 192.60 level, And resistance is now likely to be seen at 208.00, a move above could see prices testing 211.80.