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Technically MCX Natural Gas is getting support at 197.6 and below same could see a test of 196.2 levels and resistance is now likely to be seen at 199.8, a move above could see prices testing 200.6.
Natural Gas on MCX settled up 1.22% at 198.90 in the line of expectation inching higher as the buying is getting stronger and the market may be getting ready to breakout to the upside above 200 level.
Last week, the U.S. Energy Information Administration announced a storage build of 35 Bcf in the week-ended July 27, raising U.S. inventories to 2.308 Tcf. Total stocks are 688 Bcf now below inventories one year ago and 565 Bcf under the five-year historical average.
While according to NatGasWeather for August 7-13: “Strong upper high pressure has set up over the East where highs will reach the mid-90s into major Northeast cities for another few days. The West will be back to very hot with highs of 90s to 100s, including the Northwest.
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Weather systems with showers and cooling will track the Midwest and east-central US as the week progresses, then deep into Texas and the South this weekend into next week with highs of upper-70s and 80s, easing high national demand to moderate.”
For weeks, speculators had ignored the low levels of weekly injections and the relatively wide storage deficit, thinking that with production at record levels, the deficit would become a non-factor by the end of October. We are seeing strength early this week due to weather concerns.
We could see further strength this week on storage concerns, especially if the U.S. EIA’s weekly storage report misses to the downside again, however, weak August seasonality is likely to prevent an extended rally beyond the current retracement zone resistance.
Trading Ideas:
–Natural gas trading range for the day is 196.2-200.6.
–Natural gas rose on expectations that hot weather this week would keep the amount of gas available to go into storage low, despite record production.
–The amount of gas in storage was now at its lowest level for this time of year in 15 years after four consecutive weeks of lower-than-normal storage builds.
–Temperatures across much of the country, however, have remained mostly steady at above-normal levels since the start of June.
Courtesy: Kedia Commodities
Source: Commodityonline.com
