Natural gas prices experienced a significant decline of 2.31%, concluding at Rs 329.5. This downturn was largely influenced by forecasts of warmer weather for the initial half of January, which diminished expectations for near-term heating demand. Although meteorologists continue to forecast colder conditions extending through mid-January, with Heating Degree Days surpassing seasonal averages, the short-term expectation of milder temperatures has influenced sentiment and prompted profit-taking following recent gains.

At a fundamental level, demand indicators continue to exhibit supportive characteristics. In December, average deliveries to the eight major LNG export terminals in the U.S. reached 18.5 bcfd, marking a continuation of record gas flows and exceeding the previous month’s high. The U.S. Energy Information Administration disclosed a storage withdrawal of 166 bcf for the week ending December 19, surpassing both last year’s draw and the five-year average significantly.

Total gas inventories have decreased to 3,413 bcf, positioning them slightly below both the levels from a year ago and the five-year average, indicative of tightening balances as winter demand increases. Production, however, continues to exhibit strength. LSEG estimates that U.S. output rose to a record 110.1 bcfd in December, while the EIA anticipates that both production and consumption will hit record highs in 2025, thereby constraining upside potential.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 1.86% decline in open interest to 25,286, accompanied by a Rs 7.8 decrease in price. Natural gas exhibits significant support at Rs 319.2, with potential for additional downside movement towards Rs 308.9. On the upside, resistance is observed at Rs 337.7, and a breach above this level may lead to a test of Rs 345.9.