Natural gas prices up 11.7% this week; choppy trade likely with upward momentum


Natural gas prices surged 11.7 percent during the week to settle at Rs 421.20 per mmBtu on the MCX after scaling a 52-week high to touch the highest level since August 2008. The prices rose in three of the five trading sessions.

The gas price hit a lifetime high of Rs 467.80 on MCX and touched the 2014 high of $ 6.28 on the NYMEX on September 28.

Gas has been trading higher than the 5, 20, 50, 100, and 200-day simple and exponential moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 64.98, which suggests an upward movement in the prices and MACD is holding above the Zero Line at 23.79, indicating strength in the price.

The US Energy Information Administration (EIA) reported that the country’s natural gas inventories rose by 88 billion cubic feet (Bcf) for the week ended September 24 against market expectations of a 66 Bcf build.

The prices were supported by infrastructure bottlenecks and rising demand in Europe and Asia ahead of winter.

The average LNG price for November delivery into Northeast Asia was estimated at $ 32 per metric million British thermal units (mmBtu), up nearly 20 percent from the previous week, Reuters reported.

India increased the price of domestically produced natural gas by 62 percent to $ 2.90/mmBtu from $ 1.79/mmBtu effective October 1, according to price notification from Petroleum Planning and Analysis Cell (PPAC).

In its weekly report, Baker Hughes said the number of rigs drilling natural gas in the US remain unchanged at 99 for the week to October 1.

MCX iCOMDEX Natural Gas Index fell 116.88 points or 2.26 percent to end at 5,049.83.

In the futures market, natural gas for October delivery touched an intraday high of Rs 446.50 and an intraday low of Rs 413.30. In the current series, natural gas has touched a low of Rs 286.40 and a high of Rs 467.80.

Natural gas delivery for September slipped Rs 7.60, or 1.77 percent, to settle at Rs 421.20 per mmBtu with a business turnover of 5,391 lots.

Delivery for October declined Rs 5.70, or 1.30 percent, to close at Rs 432.90 with a business volume of 2,309 lots.

On October 1, the October and November contracts traded at Rs 5,486.51 crore and Rs 339.67 crore, respectively.

Kotak Securities said while Europe concerns may support prices, subdued weather-related demand will keep a check on prices, hence gains are unlikely to be sustained.

Natural gas price settled with a loss of 5.45 percent at $ 5.54 per mmBtu in New York.

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