Natural gas futures down nearly 2% at Rs 186.90 per mmBtu on weak global cues

Natural gas futures fell nearly 2 percent to Rs 186.90 per mmBtu on December 11 as participants increased their short positions as seen by the open interest. Natural gas price had gained 4.5 percent yesterday on the NYMEX.

The US Energy Information Administration (EIA) reported that US natural gas inventories dropped by 91 billion cubic feet (bcf) for the week ended December 4.

The larger than expected draw in weekly inventory, forecast of colder weather and improved demand for LNG export lent support to the price yesterday.

However, the longer-term outlook for warmer than normal US winter temperature is bearish for prices that may reduce heating demand.

MCX iCOMDEX Natural Gas Index was down 40.84 points, or 1.73 percent to 2,316.54.

Kshtij Purohit, Product Manager Currency & Commodities, CapitalVia Global Research Limited said, “Natural Gas Price is trading sideways; late winter start is not supportive for demand and drag down the prices. The downside support is at Rs 160 which is also 200 Days SMA and will be the key level for the commodity, whereas Rs 187.70 act as day resistance. The price is expected to trade between Rs 178-187 levels.”

In the futures market, natural gas for December delivery touched an intraday high of Rs 189.70 and an intraday low of Rs 186.40 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 175.90 and a high of Rs 259.80.

Natural gas delivery for December fell Rs 3.60, or 1.89 percent, to Rs 186.90 per mmBtu at 14:27 hours IST with a business turnover of 11,789 lots.

Natural gas delivery for January slipped Rs 3.40, or 1.77 percent, to Rs 189 per mmBtu with a business volume of 1,703 lots.

The value of December and January’s contracts traded so far is Rs 844.66 crore and Rs 32.46 crore, respectively.

Natural gas has recovered after testing October lows and we may see some extended gains as the market reacts to sharp withdrawal from stocks, however, a sharp rise is unlikely until weather-related demand picks up significantly, said Kotak Securities.

At 09:01 (GMT), the natural gas price was down 0.67percent quoting at $2.53 per mmBtu in New York.

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