Commodity Trading Tips for Natural gas by KediaCommodity

Ajay Kumar Kedia 22 August 2013

Natural gas settled down -1.04% at 218.80 after investors locked in gains from an earlier rally on news of a return of hotter weather and sold the commodity for profits. Prices shot up on Monday after weather forecasting services called for above-normal temperatures to settle in from the northeastern US to the West Coast through early September. Some models called for much hotter temperatures across the central US Plains states through the end of the month. Demand for natural gas tends to rise at the country's thermal power plants when temperatures climb, as homes and businesses throttle up their air conditioners. By Tuesday, however, profit taking sent prices falling. Meanwhile, markets began to look ahead to weekly supply data. Total US natural gas storage stood at 3.006 trillion cubic feet in the week ending Aug. 9, 1.5% above the five-year average. Early injection estimates for this week's storage data range from 71bcf to 76bcf, compared to a 43 billion cubic feet increase during the same week a year earlier. The five-year average for the week is a build of 56bcf. On Monday, Wall Street investment bank Morgan Stanley predicted that US storage levels at the end of October will be in line with the last three years. Natural gas in storage will be approximately 3.86 trillion cubic feet by the end of October according to the Wall Street bank. Technically market is under long liquidation as market has witnessed drop in open interest by -17.66% to settled at 4880 while prices down -2.3 rupee, now Naturalgas is getting support at 216.1 and below same could see a test of 213.5 level, And resistance is now likely to be seen at 221.8, a move above could see prices testing 224.9.