Natural Gas Futures Face Selling Pressure, Analysts Anticipate Temporary Bounce

Natural gas futures tumbled a little over 15 per cent last week following a 5 per cent decline during the week before, reflecting considerable selling pressure on the commodity over the last couple of weeks.

As the October futures, priced at ₹240/mmBtu, are set to expire on October 27, market analysis has shifted to the November futures contract, which stands at ₹287/mmBtu.

The November natural gas futures breached the support level at ₹320 last week, extending the downward movement to hit a low of ₹285.4 during early trade on Monday. However, technical indicators point toward potential support ahead at ₹280, followed by another support level at ₹270.

Given this price structure, market observers note a possibility for the November futures to see a temporary rise, driven by the ₹270-280 price band. Under this scenario, the contract could move up to ₹306. If the commodity surpasses this level, gains could potentially extend to ₹315.

Conversely, downside risks remain if the price slips below ₹270, which could cause the ongoing downtrend to extend into the ₹255-250 region.

Current market conditions indicate that the broader trend may not turn bullish, though a corrective rally remains possible. Consequently, trading strategies vary based on risk appetite. Market participants with high risk tolerance may consider buying opportunities, while risk-averse participants are advised to stay out.

Specific trading parameters suggest buying natural gas November futures if the price rises above ₹290, with a target of ₹306 and a stop-loss set at ₹284.

"Recent volatility in natural gas futures highlights the importance of strict risk management for market participants. While technical charts indicate a potential short-term corrective rally around the ₹270 to ₹280 support band, broader market trends remain under selling pressure. Traders must carefully weigh their risk appetite and adhere to disciplined stop-loss strategies rather than chasing speculative recovery trends in volatile commodity markets." — Dr. Shishir Gupta, Founder & CEO, StartupLanes