Natural gas price has been inching higher over the last few weeks. The US Natural gas futures contract on the New York Mercantile Exchange (Nymex) has surged about 6 per cent from its March low of $2.60 mmBtu to the current level of $2.75. On the domestic front, the natural gas futures contract on the Multi Commodity Exchange (MCX) has surged about 9 per over the same period and is currently trading at ₹182 per mmBtu. Weakness in the rupee has helped the MCX contract to outperform the global price.

Outlook: Though the Nymex Natural gas futures contract has been range-bound between $2.60 and $2.80, the bias is bullish. A break above $2.80 is likely . Such a break will take the contract higher to $2.90 or even to $2.95.

The contract will come under pressure if it breaks below $2.65 decisively. In such a scenario, the possibility is high of the contract declining below $2.60 and target $2.55. The short-term outlook for the MCX contract is bullish. Key support is at ₹175. A rally to ₹188 or ₹190 looks likely in the short-term. A strong break above ₹190 will pave way for a fresh rally targeting ₹200 and ₹205 levels over the medium term. However, inability to breach the ₹188-₹190 resistance zone can trigger a pull-back move to ₹183 and ₹180 again.

Short-term traders with a high-risk appetite can make use of dips to initiate long positions at ₹178 and ₹176. Stop-loss can be placed at ₹172 for the target of ₹190. Revise the stop-loss higher to ₹181 as soon as the contract moves up to ₹183.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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