Natural gas futures trade lower at Rs 186 per mmBtu on weak demand

Natural gas futures were trading lower at Rs 186 per mmBtu on October 7 as participants increased their short positions as seen by the open interest. Natural gas declined 3.6 percent the previous day on the NYMEX.

Market participants booked some profit after a sharp rally in natural gas prices in the last few sessions.

Natural gas witnessed mixed trade as market players assessed the impact of increased storm activity in the Atlantic. According to the US Bureau of Safety and Environmental Enforcement, approximately 8.59 percent of Gulf of Mexico gas production was shut as on October 6.

The US Energy Information Administration in its short-term energy outlook has raised the dry gas production estimates from 89.88 billion cubic feet (BCF) per day to 90.64 BCF per day for 2020.

According to the US National Hurricane Center report, Hurricane Delta has strengthened into a category 4 storm and is heading towards the US Gulf Coast.

In the futures market, natural gas for October delivery touched an intraday high of Rs 187.30 and an intraday low of Rs 185.30 per mmBtu on MCX. So far, in the current series, natural gas has touched a low of Rs 179.10 and a high of Rs 221.

Natural gas delivery for October slipped Rs 2.10, or 1.12 percent, to Rs 186 per mmBtu at 1421 hours with a business turnover of 9,222 lots.

Natural gas delivery for November eased Rs 1.70, or 0.74 percent at Rs 229 per mmBtu with a business volume of 1,562 lots.

The value of October and November contracts traded, so far, is Rs 792.34 crore and Rs 20.12 crore, respectively.

Natural gas may witness choppy trade as storm activity impact both demand and supply but maintain a sell-on-rise view on weakening demand outlook, Kotak Securities said.

At 0857 GMT, the natural gas price was marginally up 0.16 percent quoting at $2.52 per mmBtu in New York.