Natural Gas Trading Patterns And Ideas: August 1, 2012

Natural gas trading range for the day is 173.23-185.63. Market is looking to take support at 175.9, a break below could see a test of 173.2 and resistance is likely to be seen at 182.1, a move above could see prices testing 185.6. In yesterday's trading session Natural gas has touched the low of 176.8 after opening at 178, amid profit taking following Monday’s rally, before recovering those losses.

Natural gas yesterday traded with the positive node and settled 0.45% up at 178.50 as forecasts for hotter than normal temperatures across the US continued to provide support for gas-powered electricity demand.

Natural gas traders were looking ahead to the EIA’s monthly gross natural gas production report due later in the day, looking for signs that record- or near-record-high output was finally slowing.

A bout of hot weather across much of the US over the past several weeks has prompted power generators to burn more of the fuel to meet demand, easing a storage glut and lending support to prices. Stockpiles increased to 60% above the five-year average earlier this year after a mild winter cut demand for Natural gas to heat homes and businesses, sparking fears that supplies would exceed available storage capacity by the end of the year.

Gold, Silver, Copper, Crude Oil to trade sideways

European markets are trading on mixed note taking cues from unfavorable economic data from the region along with speculation that central bankers might take steps to boost the economy. Asian markets too ended on a mixed note awaiting policy decisions from US Federal Reserve later in the evening today. US stock Futures are however trading on firm note.

Spanish Manufacturing Purchasing Managers' Index (PMI) increased by 1.2 points to 42.3-level in July as against a previous rise of 41.1-mark in June. Italian Manufacturing PMI declined by 0.3 points to 44.3-mark in last month from previous level of 44.6 in June. European Final Manufacturing PMI declined marginally by 0.1 points to 44-mark
in July as compared to earlier 44.1-level a month ago. UK’s Nationwide House Price Index (HPI) declined by 0.7 percent in July as against previous decline of 0.6 percent a month ago.

Manufacturing Purchasing Managers' Index (PMI) declined by 3 points to 45.4-mark in last month from previous level of 48.4 in June. Spot Gold prices gained marginally by 0.1 percent on account of mixed global market sentiments ahead of Federal Reserve policy decision today and ECB meeting to be held tomorrow to decide steps to curtail
the Euro zone debt. Weakness in the US Dollar Index (DX) also supported an upside in the prices.

Spot Silver prices however were trading marginally down 0.04 percent taking cues from bearishness in the base metals pack. However, sharp downside in the prices was cushioned on account of weakness in the DX. The base metals pack traded lower today on account of mixed global market sentiments coupled with expectations that US policymakers will not take any stimulus measures. However, sharp downside in prices was cushioned on the back of decline in LME inventories and weakness in the DX.

Nymex crude oil prices gained by 0.3 percent taking cues from expectations of decline in US crude oil inventories coupled with weakness in the DX. However, sharp upside in prices was capped on the back of expectations that US policymakers will not take any stimulus measures. The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 8:00pm IST and US crude oil inventories is expected to decline by 0.7 million barrels for the week ending on 27th July 2012.

In today’s session we expect precious metals, base metals and crude oil prices to trade sideways with downside bias on speculation that US Federal Reserve might not provide stimulus measures to boost the economy. However, weakness in the DX might cushion sharp fall in the prices. However, expectation of decline in the US crude oil inventories might cushion sharp fall or either lead to reversal in the prices today.