MCX Natural Gas futures up 2.25% to Rs 204.70/mmBtu this week; adopt sell-on-rise strategy, says expert


Natural gas jumped 2.25 percent this week to settle at Rs 204.70 per mmBtu on the MCX. The energy price rose three out of five trading sessions on the domestic bourse.

The energy commodity has been trading higher than its 20, 50, 100 and 200 days’ moving averages but lower than the 5-day moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 60.05, which indicates positive momentum in the prices.

The US Energy Information Administration (EIA) reported that the country’s natural gas inventories rose by 38 billion cubic feet (Bcf) for the week ended April 16 as against market expectations of a 49 Bcf rise. Natural gas in storage was 1,883 Bcf as of April 16, 2021.

The number of rigs drilling natural gas in the US was unchanged at 94 rigs for the week to April 23, said energy services firm Baker Hughes in a weekly report.

Natural gas demand for the residential sector increased to 95.3 billion cubic feet (Bcf) per day compared to 88.6 Bcf in the preceding week, while the industrial sector was higher at 23.4 Bcf/d on a weekly basis, according to PointLogic Energy.

“Fundamentally for the weeks ahead, we are estimating MCX Natural Gas futures to trade bullish in expectancy of steady supplies, improved demand/usage and a small rise in inventories observed on a weekly basis,” said Sunand Subramaniam, Senior Research Associate, Choice Broking.

Subramaniam also said that the US CPC further expects extreme weather conditions for the next 6-10 days in this spring season which is expected to bring in a bullish trend in prices during the week ahead. “Overall, we expect an upbeat trend in MCX Natural Gas in the coming week,” Subramaniam noted.

MCX iCOMDEX Natural Gas Index was down 25.03 points or 0.94 percent to end at 2,642.84.

In the futures market, natural gas for April delivery touched an intraday high of Rs 207.30 and an intraday low of Rs 204.30 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 179.80 and a high of Rs 223.

Natural gas delivery for April dropped Rs 2.10, or 1.01 percent to settle at Rs 204.80 per mmBtu with a business turnover of 4,107 lots.

Natural gas delivery for May slipped by Rs 1.80, or 0.84 percent, to close at Rs 211.40 per mmBtu with a business volume of 15,296 lots.

The value of April and May’s contracts traded on Friday was Rs 1,087.56 crore and Rs 1,251.31 crore, respectively.

Natural gas price settled with a loss of 1.05 percent at $ 2.72 per mmBtu in New York.

Next Week Outlook

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Strategy: Traders should keep an eye on the Sell-on-rise opportunity in MCX Natural gas future from the resistance level around 208 – 209. For this sell position, traders should keep a stop loss around 211.50 and aim the target beyond 197.50 for the coming week.

Rationale: MCX Natural gas price showed a negative sign on Friday and not made Inside bar on daily charts. In the United States, we will see temperatures as high as 82°F, and that will almost certainly wear down the demand for the market. Furthermore, you can see that the Rs 211-212 level is obvious resistance for the market.

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