Natural Gas Trading Ideas For August 2, 2012

Natural gas trading range for the day is 170.67-183.87. Market is looking to take support at 173.1, a break below could see a test of 170.7 and resistance is likely to be seen at 179.7, a move above could see prices testing 183.9. In yesterday's trading session Natural gas has touched the low of 174.8 after opening at 179.1, and finally settled at 175.6.

Natural gas yesterday traded with the negative node and settled -1.65% down at 175.60 sliding away from 7month highs hit earlier in the week, after data indicated Natural gas output rose in May added to concerns over a supply overhang.

Natural gas accounts for about a quarter of US electricity generation. A bout of hot weather across the US over the past several weeks has prompted power generators to burn more of the fuel to meet demand, easing a storage glut.

US Energy Information Administration (EIA) is scheduled to release its weekly inventories and US Natural gas inventory are expected to increase by 22 billion cubic feet (bcf) for the week ending on 27th July 2012.

Gold, silver make gains, base metals in mixed trend

European markets are trading on an upbeat note on expectation that European Central Bank (ECB) today might take stimulus measures and steps to curtail the Euro zone debt. Asian markets however ended on a weak note. While US equities are trading on a positive note today. Spanish Unemployment Change declined by 71,100 to -27,800 in July as against a previous decline of 98,900 in June. European Producer Price Index (PPI) remained unchanged at -0.5 percent in June. UK’s Construction Purchasing Managers' Index (PMI) increased by 2.7 points to 50.9-mark in July as against a previous rise of 48.2-level in June.

Spot gold prices gained 0.18 percent anticipating affirmative action by the ECB to cut the escalating Euro zone debt in the meeting today. Weakness in the DX also supported an upside in the gold prices. Gold prices touched a high of $1607.10/oz and were trading around $1601.4/oz till 4:30 p.m today. In the domestic markets depreciation in the Indian rupee also supported an upside in the gold prices.

Tracking strength in the gold prices along with mixed trades in the base metal pack Silver prices gained 0.15 percent. Additionally, weakness in the dollar index along with speculation that supportive action would be taken to solve the Euro zone debt crisis also added to gains of the silver prices. On the MCX, silver prices increased by 0.05 percent due to depreciation in the Indian rupee.

The base metals pack traded on a mixed note ahead of the European Central Bank (ECB) meeting. However, sharp downside in prices was cushion on account of decline in LME inventories along with weakness in the DX. Copper, the leader of the base metals decline by 0.7 percent today till 4:30pm. But decline in LME Copper inventories by 0.7 percent which stood at 246,800 tonnes coupled with weakness in the DX restricted sharp fall in red metal prices.

Nymex crude oil prices gained by 0.25 percent today on the back of decline in US crude oil inventories, expectations of stimulus measures from ECB policymakers along with weakness in the DX. Crude oil prices touched an intra-day high of $89.54/bbl and was trading at $89.14/bbl today till 4:30pm IST. On the domestic bourses, prices increased by 0.12 percent as a result of depreciation in the Indian Rupee and were trading around Rs.5,026/bbl today.

In the evening session we expect precious metals, base metals and crude oil prices to trade sideways on the back of stimulus measures to be taken by the ECB to boost the economy which may weaken the DX and provide support to the prices. On the other hand, unfavorable jobless claims and factory orders from US may exert down side pressure to the prices.