Natural gas jumps 1.27% to Rs 200.20 per mmBtu this week on MCX, outlook bullish


Natural gas futures rose to settle at Rs 200.20 per mmBtu on January 15 as participants trimmed their position as seen by the open interest. Natural gas price gained Rs 2.50, or 1.27 percent, during the week on the MCX.

Natural gas prices fell in three out of the five trading sessions in the Indian market.

“Fundamentally for the weeks ahead, we are estimating MCX Natural Gas futures to trade bullish in expectancy of steady supplies, better demand/usage and fall in inventories observed on a weekly basis. Natural gas inventories have showcased a seasonal fall to 3,270 billion cubic feet, lower compared to previous reported inventories of 3,402 billion cubic feet,” said Sunand Subramaniam, Senior Research Associate, Choice Broking.

“The US CPC expects developed weather conditions for the next 6-10 days, which is expected to support prices in the week ahead. Overall, we expect bullish-trend in MCX Natural Gas futures in the coming week”, he said.

The demand for natural gas has been lower last week amid a slight increase in residential sector demand to 118.4 billion cubic feed per day (Bcf/d) compared 113 Bcf/d in the prior week, according to PointLogic Energy.

Natural gas consumption in the industrial sector was marginally higher at 25 Bcf/d on a weekly basis.

Chris Durman, Global Head of LNG Analytics, S&P Global Platts said, “LNG supply has continued to remain challenged, especially in the key Asia Pacific region, with long term ongoing issues in Malaysia and Australia contributing to a tight regional balance. The US continues to export at historically high volumes but continued congestion at the Panama Canal means that many Asia-bound cargoes are still choosing to take the long route via the Cape of Good Hope.”

However, there are signs that the supply situation is improving. Qatari exports have recovered to close to year ago levels, Australia’s Prelude FLNG appears to be finally ready to start loading cargoes and at least one train at Bintulu (Malaysia) seems to be coming back online. The LNG fleet has also grown by 6 new faster vessels since the start of the year with several more expected to commission over the coming weeks which will help ease tightness in the shipping market”, Durman noted.

The US Energy Information Administration (EIA) reported that US natural gas inventories dropped by 134 Bcf for the week ended January 8 against market expectations of a 129 Bcf.

The number of rigs drilling natural gas in the US rose by 1 at 85 rigs for the week to January 15, said Baker Hughes in a weekly report. The rigs count rose for the second straight week.

MCX iCOMDEX Natural Gas Index jumped 21.06 points, or 0.86 percent to close at 2,456.95.

In the futures market, natural gas for January delivery touched an intraday high of Rs 204.90 and an intraday low of Rs 193 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 167.40 and a high of Rs 255.90.

Natural gas delivery for January gained Rs 2.60, or 1.32 percent, to settle at Rs 200.20 per mmBtu with a business turnover of 5,399 lots. While delivery for February soared Rs 2, or 1.02 percent, to close at Rs 197.60 per mmBtu, with a business volume of 2,324 lots.

The value of January and February’s contracts traded on January 15 was Rs 6,145.64 crore and Rs 207.88 crore, respectively.

Natural gas price settled with a gain of 3.23 percent quoting at $ 2.75 per mmBtu in New York.

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