Natural gas yesterday traded with the positive node and settled 4.19% up at 134.2 on short covering ahead of expiry of january contract also market in advance taken support of significant supply decline last week. The US EIA stated in its weekly report that natural gas storage in the US dropped by 192mcf , after declining by 87 million cubic feet the week before. The market shrugged off earlier word of Chesapeake Energy stating it will immediately cut 8% of production and said it will cut its activity in regions that produce only gas in half by the second quarter. The cutbacks in production are designed to reduce a supply glut in the US caused by a warm winter season. In bullish news earlier, The US Energy dept cut its estimate for natural gas reserves in the Marcellus shale formation by 66%, citing improved information on supply. Natural gas rallied almost 18.5% in this week, prior to the selling, in response to the bullish news. The US NOAA stated last week that it expects the warmer than normal winter temperatures on the East Coast, Midwest and much of the Southwest to continue through mid February adding to the long term bearish sentiment. Meanwhile, Occidental Petroleum announced it will cut back on natural gas drilling due to the low prices and Conoco Phillips agreed by limiting North American natural gas production investments. For today's session market is looking to take support at 129.8, a break below could see a test of 125.4 and where as resistance is now likely to be seen at 137.8, a move above could see prices testing 141.4.

Trading Ideas:

Natural Gas trading range is 129.8-144.8.

Natural gas prices jumped almost by 5% on short covering and expectation of supply decline last week.

Chesapeake Energy stating it will immediately cut 8% of production and said it will cut its activity in regions that produce only gas.

US Energy dept cut its estimate for natural gas reserves in Marcellus shale formation by 66%, citing improved information on supply.