Natural gas experienced an increase of 4.68% yesterday, closing at Rs 364.9, driven by heightened expectations for heating demand alongside strong LNG export activity, which bolstered prices. Forecasts of colder weather across the U.S. in anticipation of winter have increased the demand for gas-intensive heating, while consistent global demand for LNG from Europe and Asia has contributed additional momentum. In October, average gas flows to the eight major U.S. LNG export terminals reached a historic high of 16.5 billion cubic feet per day, an increase from 15.7 bcfd in September, indicating robust export activity.

The rise is observed as Europe persists in substituting Russian gas imports in the context of diminished inventories, while the U.S. administration advocates for energy trade agreements with Asian countries. In October, domestic production remained robust at 107 bcfd, even as exports increased, while underground storage levels continued to rise. The most recent figures indicate that U.S. natural gas inventories increased by 74 billion cubic feet for the week ending October 27, surpassing market forecasts of a 71 bcf rise.

This brings total inventories to 3,853 bcf, which is 0.8% higher than the previous year and 4.6% above the five-year average. The U.S. Energy Information Administration has projected that by 2025, there will be record levels of output and demand, with dry gas production anticipated to reach 107.1 billion cubic feet per day and consumption expected to be at 91.6 billion cubic feet per day. LNG exports are projected to increase to 14.7 bcfd in 2025 and 16.3 bcfd in 2026.

From a technical perspective, the market is experiencing new buying activity, evidenced by a 3.02% increase in open interest to 18,115, alongside a price increase of Rs 16.3. Support stands at Rs 354.9; a decline below this level may lead prices to test Rs 345. Conversely, resistance is identified at Rs 371.8, with a possible upward movement toward Rs 378.8.