Weekly Outlook on Natural Gas- 24 Mar 2023

Natural gas prices continued to decline, falling by 8% to a three-week low to Rs.179 with no sign of recovery as warmer weather and economic turmoil eased expectations of demand. Sentiments remain weak as forecasts call for less cold weather and lower demand this week than previously expected, along with an increase in gas output so far this month. The gas market has been extremely volatile in recent weeks as traders bet on the latest weather forecasts. Gas prices have also been hit by instability in the US financial sector as three major banks collapsed, and the hastily arranged takeover of Credit Suisse by rival Swiss lender UBS raised concerns of economic uncertainty and the probability of recession.

Weekly Commodity & Currency Outlook:

NYMEX gas prices crashed more than 7% during the week and trade near to a three-week low at 2.16 levels. On a weekly chart, the price has been falling for the last three weeks after a further pullback moves from 2.45 to 3.04 levels in the prior week of trading. The price has traded below all the key Moving Averages and the Ichimoku Cloud formation. Moreover, the price has also been trading between the middle & lower Bollinger Band and the band is widening whereas Bollinger Band %B is at 0.224 mark, which suggests more volatility in the counter for the near term. On the downside, the price may find support around 1.79 & 1.65 levels, while on the top, it has a resistance at 2.58 & 2.80 levels. 

On the MCX front, there has been a sharp correction in natural gas prices since the last many weeks. The price has breached all its major support zones and is unable to find further strength. However, in mid Feb, prices had recovered from the low of 163.40 to the 246 mark, but since March, again, we are witnessing further downfall in the counter. However, the momentum indicator RSI is near to its oversold territory with negative crossover. Williams%R is also below the -80 mark. On the downside, the price may find support around 163 & 147 levels, while on the other hand; it has a resistance around 205 & 220 levels.    
 

Hence, traders are advised to trade cautiously and follow the sell on rise strategy for the coming days. One should also look for the improvement of storage data and demand outlook from the major consumers, as both factors can support prices further. 

Important Key Levels: