Naturalgas on MCX settled down -2.41% at 218.3 following U.S. government data that showed a smaller-than-expected addition to stockpiles. Many market participants have been counting on a combination of winter heating demand and lower drilling activity to lead to higher prices. Natural gas prices have increased more than 13% in the last two weeks. But some have been surprised by the recent run-up in natural gas prices, as it comes amid relatively mild weather, which means relatively little demand for natural gas for either heating or cooling. And natural gas rigs have started getting back to work in the U.S., according to oilfield services firm Baker Hughes Inc. The firm’s weekly rig count showed 11 additional natural gas rigs--the largest weekly increase since late 2014. The price of natural gas is up more than 70 percent in the last six months as drilling in the U.S. slows. An unusually warm summer kept demand high. Prices could dip in the fall, but as colder weather moves in, natural gas demand is expected to increase again, helping support higher prices. The EIA said in its weekly report that natural gas storage in the U.S. rose by 79 billion cubic feet in the week ended October 7, below expectations for an increase of 87 billion cubic feet. That compared with a gain of 80 billion cubic feet in the preceding week, 97 billion a year earlier and a five-year average build of 92 billion cubic feet. Technically market is under long liquidation as market has witnessed drop in open interest by -42.39% to settled at 5692 while prices down -5.4 rupee, now Naturalgas is getting support at 215.9 and below same could see a test of 213.5 level, And resistance is now likely to be seen at 222.6, a move above could see prices testing 226.9.

Trading Ideas:

Naturalgas trading range for the day is 213.5-226.9.

Natural gas prices dropped following U.S. government data that showed a smaller-than-expected addition to stockpiles.

The natural gas weekly rig count showed 11 additional natural gas rigs--the largest weekly increase since late 2014.

Market participants have been counting on a combination of winter heating demand and lower drilling activity to lead to higher prices.