Naturalgas on MCX settled up 2.54% at 225.80 on short-covering on the speculation that colder winter weather will drives up demand for natural gas and average withdrawals from storage are the highest they have been in years, according to the U. S. Department of Energy. With a cold start to the winter in much of the United States, demand is growing, storage levels are dropping and prices are rising. Last week, withdrawals of natural gas from storage in the U. S. topped five-year averages, analysts for the Energy Department found. Last week, natural gas futures fell 5%. The fall in natural gas prices was due to the forecast for higher temperatures, which could decrease the use of natural gas for heating purposes during the winter. A colder system will sweep across the central and eastern U. S. later this week to finally end the current mild spell as overnight lows drop below freezing across all but the far southern U. S. Extended models pointed to colder conditions from January 31 through February 3, maintaining near to stronger than normal natural gas demand. Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw in a range between 105 and 117bcf in the week ended January 20. That compares with a withdrawal of 243bcf in the preceding week, 211 billion a year earlier and a five-year average drop of 176bcf. Total natural gas in storage currently stands at 2.917tcf, according to the US EIA, 12.9% lower than levels at this time a year ago. Now technically market is under short covering and getting support at 222.9 and below same could see a test of 220 level, And resistance is now likely to be seen at 228.3, a move above could see prices testing 230.8.

Trading Ideas:

# Naturalgas trading range for the day is 220-230.8.

# Natural Gas prices gained on short covering as colder winter weather drives up demand for natural gas

# Support also seen after the speculation that the average withdrawals from storage are the highest they have been in years

# Weather models initially predicted mild temperatures throughout most parts of the U. S. during the period.