Weekly Outlook on Natural Gas - 25 Nov 2022

Natural gas prices opened positively and rallied for a third consecutive day amid seasonally strong demand in the West and festering worries about a railroad strike and expectation of a blast of cold in the month ahead.

During the initial week, natural gas prices expanded a lot, of energy in the market but on Thursday’s session, witnessed choppy momentum as U.S. was closed in observance of Thanksgiving Day. Overall, prices gained more than 15% in a week to trade at Rs. 577 in Friday’s session.

                                                           Weekly outlook on Natural Gas

Prices also surged in Europe & Asia over the week, reflecting Russia's imposed supply concerns and continued strong demand for LNG sent from the United States.

On the NYMEX division, natural gas prices have retreated from the immediate resistance of 50% Retracement Levels of its prior rally but are still hovering above 200-days Simple Moving Averages that suggest strength in the counter. However, after a sharp recovery from the low of $5.70, now, the price may be exhausted and could see some consolidation for a few days. On the other hand, an indicator RSI & MACD witnessed a positive crossover on the daily frame, which supports the prices for the near term. On the downside, it may find the support around $6.70 and 6.25 levels, while on the higher side, $7.40 acts as an immediate resistance zone. Once the market surpasses that level, it may test the $8.10 mark. 

On the MCX front, the price recovered well from the range of Rs. 465-470 and moved above prior swing highs. On the daily chart, the prices settled above 200-days Exponential Moving Averages and Rising Trendline, which was the resistance for the prices. In the recent momentum, the prices are unable to surpass the Upper Bollinger Band, which acts as an immediate hurdle for the near term. In addition, the volume of activity shows silence in the recent trades, which indicates biasness. However, fundamentally, prices are expected to move upward due to seasonal demand and global concerns. So, based on the above aspects, one can look for a buy on dips strategy for the coming weeks. On the downside, the price is holding support at 530/510 levels, while on the upside, resistance comes at 615 and 630 levels.

Important Key Levels: