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Thursday, December 2, 2021

MCX Natural Gas under short covering; Resistance seen at 458.8

Technically Natural Gas market is under short covering as market has witnessed drop in open interest by 28.45% to settled at 6329 while prices up 12.8 rupees.

Now MCX Natural Gas is getting support at 411.2 and below same could see a test of 391.9 levels, and resistance is now likely to be seen at 458.8, a move above could see prices testing 487.1.

Natural Gas yesterday settled up by 3.06% at 430.5 on prospects of supply constraints ahead of the winter, despite warm autumn weather.

US production change averaged 46bcf per week in the summer, below 52bcf last year, amid uncertainties related to the pandemic. At the same time, inventories in Europe are at historically low levels for this time of year.

In China, imports are almost the double from last year’s levels and in Brazil, imports are also near record levels as the country faces its worst drought in 91 years, hurting hydropower output.

With gas prices at record highs of around $29 per mmBtu in Europe and Asia versus just around $6 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States could produce. The United States exports about 10% of the gas it produces as LNG.

Despite reductions at several U.S. LNG export plants this month, the amount of gas flowing to the plants slipped modestly to an average of 10.4 billion cubic feet per day (bcfd) so far in September from 10.5 bcfd in August, according to data provider Refinitiv. The premiums of futures for November 2021 over October 2021 and March 2022 over April 2022 both rose to record highs this week.

Trading Ideas:
–Natural Gas trading range for the day is 391.9-487.1.
–Natural Gas extended a rally on prospects of supply constraints ahead of the winter, despite warm autumn weather.
–US production change averaged 46bcf per week in the summer, below 52bcf last year, amid uncertainties related to the pandemic.
–At the same time, inventories in Europe are at historically low levels for this time of year.

Courtesy: Kedia Commodities

Source: Comodity Online

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