Naturalgas on MCX settled down by -3.71% at 189.30 in the line of expectation as it was expected that prices won’t extend Monday’s gains and should retreated from two-week highs on concerns that underlying warm temperatures would curb demand and prevent more than a limited decline in stockpiles. Commodity prices overall remained on the defensive which curbed any potential support for gas, especially with markets continuing to anticipate an increase in the Federal Funds rate at next week’s FOMC meeting which helped underpin the dollar. Expectations surrounding weather conditions continued to have an important underlying impact on gas prices, especially as shifts in temperatures at this time of the year will have crucial impact in determining whether there will be a build or draw in gas stockpiles. The latest 5-10 day forecast suggest that there will be cool temperatures across the Northern and Eastern US while warmer than normal conditions will prevail across the South. Markets continued to monitor comments from the CERAWeek annual conference with major companies suggesting that there will be substantial investment to bring new supplies on stream over the next few years which will boost expectations of a renewed increase in shale gas output. From a shorter-term perspective, markets were waiting for the latest weekly storage data with expectations of a draw around 60bcf in the latest week after an unexpected build of 7 Bcf last week, although this would still be below the five-year average. Technically market is under fresh selling as market has witnessed gain in open interest by 6.61% to settled at 7340 while prices down -7.3 rupees, now Naturalgas is getting support at 187 and below same could see a test of 184.6 level, And resistance is now likely to be seen at 193.4, a move above could see prices testing 197.4.

Trading Ideas:

Naturalgas trading range for the day is 184.6-197.4.

Natural gas prices once again dropped as traders continued to monitor shifting weather forecasts to gauge demand for the fuel.

Weather forecasts for the next 8-to-15 days showed that rain, snow, and cool temperatures will track across the northern and eastern US.

Based on data from the NOAA, this year’s extremely warm winter has pushed heating demand for natural gas to nearly 20% below average.