Natural gas experienced an increase of 4.12% yesterday, closing at Rs 308.3. This rise was bolstered by a decline in daily production and technical short-covering, despite projections indicating a potential decrease in demand in the short term. Prices increased even in the face of reduced gas flows to LNG export facilities, adequate storage levels, and forecasts for mild weather across the U.S. until mid-October, which is likely to limit heating demand.

As per reports, the average output in the Lower 48 states has decreased to 107.0 bcfd in October, a decline from 107.4 bcfd in September and a peak of 108.3 bcfd in August. Strong production earlier this year has facilitated substantial injections into storage, resulting in inventories approximately 6% above the seasonal average. Meteorologists anticipate above-average temperatures until October 16, which is expected to reduce heating demand, likely outweighing the consumption associated with air conditioning.

LSEG forecasts a decline in total U.S. gas demand, encompassing exports, from 101.4 bcfd this week to 98.8 bcfd in the following week. Storage increased by 75 bcf in the week ending September 19, aligning with forecasts, bringing inventories to 3,508 bcf, which represents a 0.6% rise year-on-year and is 6.1% above the five-year average.

From a technical perspective, the market is experiencing new buying activity, evidenced by a 3.95% increase in open interest to 22,626, alongside a price increase of Rs 12.2. Immediate support stands at Rs 298.8, and a breach below this level would reveal Rs 289.4 as the next target. Conversely, resistance is identified at Rs 313.8, with the potential for Rs 319.4 to be tested if surpassed.