Natural gas prices experienced a decline of 1.75%, settling at Rs 369.9, as market participants continued to incorporate milder weather forecasts, reduced near-term demand expectations, and near-record supply levels into their assessments. Weather models suggest that warmer-than-normal conditions will prevail in key consuming regions until December 26, which is likely to lead to a notable decrease in heating demand. Simultaneously, output in the Lower 48 has risen to approximately 109.7 bcfd thus far in December, slightly exceeding the record levels observed in November.

Robust production has contributed to maintaining storage levels at a comfortable state, with inventories approximately 3% above seasonal averages, thereby constraining the potential for price increases. In the context of prevailing bearish sentiment, the storage data from last week underscored the effects of a transient period of severe cold.

U.S. energy firms recorded a significant withdrawal of 177 bcf from storage for the week ending December 5, representing the fourth consecutive week of such withdrawals. Total inventories decreased to 3,746 bcf, approximately 0.7% lower than the level recorded last year, yet remaining 2.8% above the five-year average. The demand associated with LNG continues to provide support, as feedgas flows have reached a new monthly peak of 18.7 bcfd, indicative of robust export activity.

In the future, the U.S. Energy Information Administration anticipates that production and consumption will reach unprecedented levels by 2025. From a technical perspective, the market is experiencing long liquidation, as evidenced by a 0.72% decline in open interest to 19,553, coinciding with a price decrease of Rs 6.6. Natural gas exhibits support at Rs 360.8; a breach beneath this threshold may reveal the Rs 351.7 level. On the upside, resistance is identified at Rs 381.5, and a movement beyond this threshold may propel prices toward Rs 393.1.