Natural gas prices experienced a significant increase, closing up by 3.95% at Rs 352.5, bolstered by predictions of colder weather and an anticipated rise in heating demand in the upcoming weeks. Meteorologists anticipate a steady decrease in temperatures across the country leading up to January 10, as Heating Degree Days are projected to increase from 377 to 398. While this figure remains below the normal level of 449, it suggests a growing demand for heating resources.

LSEG has revised its outlook higher, projecting that average gas demand in the lower 48 states, including exports, will rise from 136.1 bcfd this week to 138.5 bcfd over the next two weeks. Near-record LNG export flows have continued to provide support, as average gas deliveries to eight major US LNG terminals have increased to 18.4 bcfd thus far this month, surpassing November’s prior record. On the supply side, LSEG reported that US dry gas output averaged a record 109.8 bcfd in December, surpassing November’s figure of 109.6 bcfd.

On a global scale, Russia’s natural gas output experienced a decline of 3% year-on-year, totaling 507 bcm for the period of January to November, which contributes to the overall supply-side sensitivity in the market. During the week ending December 12, US utilities recorded a withdrawal of 167 bcf from storage, resulting in total inventories of 3,579 bcf. Equities are currently positioned 1.7% lower than the previous year, yet they exceed the five-year average by 0.9%.

From a technical perspective, the market is experiencing short covering, evidenced by a 4.66% decline in open interest to 22,068, alongside a price increase of Rs 13.4. Natural gas exhibits a support level at Rs 345.5; a decline beneath this threshold could lead to a test of Rs 338.5. Resistance is identified at Rs 358, and a breakout may result in a rise to Rs 363.5.