Commodity Trading Tips for Naturalgas by Kedia Commodity

Naturalgas on MCX settled down -3.45% at 212.80 as fresh selling seen as expected, prices fell near a two-month low, with mild weather forecasts causing big losses for the second straight session. Prices are down almost 8% over few sessions, the biggest back-to-back losses since the start of January. Seasonal demand and fast-shrinking stockpiles have kept Nymex Natural gas prices above $3.25 a million British thermal units almost every session since Thanksgiving, but the recent losses threaten to break gas into a much lower range. Weather forecasts show warmer-than-normal temperatures covering about half the country into mid-February, extending a relatively mild winter. About half of all homes use natural gas for heat, typically making winter’s cold the biggest driver of demand and prices. Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw in a range between 83 and 94 billion cubic feet in the week ended January 27. That compares with a withdrawal of 119 billion cubic feet in the preceding week, 152 billion a year earlier and a five-year average drop of 166 billion cubic feet. Total natural gas in storage currently stands at 2.798 trillion cubic feet, according to the U.S. Energy Information Administration, 11.1% lower than levels at this time a year ago and less than 1% below the five-year average for this time of year. Technically market is under fresh selling as market has witnessed gain in open interest by 60.3% to settled at 7510 while prices down -7.6 rupees, now Naturalgas is getting support at 209.6 and below same could see a test of 206.4 level, And resistance is now likely to be seen at 218, a move above could see prices testing 223.2.

Trading Ideas:

Naturalgas trading range for the day is 206.4-223.2.

Naturalgas dropped below 213 level with mild weather forecasts causing big losses for the second straight session.

Extended weather forecasting models showed that much of the U.S. is likely to become warmer than normal after February 11.

Price can decline to 200 level range in the absence of colder temperatures.