Natural gas prices experienced a significant increase, closing up 3.5% at Rs 304.5, bolstered by predictions of colder weather and a reduction in U.S. production levels. Average gas production in the Lower 48 states decreased to 109.1 bcfd in January from a record high of 109.7 bcfd in December, with daily output approaching a three-week low near 108.0 bcfd, attributed to reductions in Louisiana and Texas. This supply-side tightening has mitigated expectations of persistently warmer-than-normal weather through January 21, which is expected to limit heating demand in the short term.

LSEG projects that average gas demand, inclusive of exports, will experience a modest increase from 130.8 bcfd this week to 132.3 bcfd next week, despite these estimates being revised downward from previous forecasts. Storage data provided additional backing, as U.S. energy companies extracted a greater-than-anticipated 119 bcf from storage, leading to a decrease in inventories to 3.261 tcf.

Equities currently stand beneath the levels observed last year, yet they remain slightly above the five-year average. Anticipating future trends, the EIA forecasts that U.S. gas production and demand will achieve unprecedented levels by 2025, supporting a more robust medium-term perspective, with Henry Hub prices expected to average $3.96/mmBtu in 2026.

From a technical perspective, the market is experiencing short covering, evidenced by a 3.71% decline in open interest alongside a Rs 10.3 price gain. Natural gas exhibits support at Rs 293.3, with additional downside anticipated around Rs 282. On the upside, resistance is positioned at Rs 310.9, and a sustained breach above this threshold could propel prices toward Rs 317.2.