Natural gas prices experienced a significant increase yesterday, closing with a rise of 5.47% at Rs 351, largely propelled by a rally influenced by weather conditions, as forecasts indicated a shift toward much colder scenarios across the Northern Hemisphere. The expansion of the polar vortex has facilitated the incursion of Arctic air into the central and eastern United States, thereby markedly increasing expectations for heating demand.

NOAA’s Climate Prediction Centre has issued a high-priority alert regarding extreme Arctic cold and the possibility of winter storms extending through the end of the month, with the most severe conditions anticipated in the last week of January. This perspective eclipsed immediate supply apprehensions, despite production levels staying high and LNG export flows experiencing a slight decline. In the latest data release, U.S. utilities reported a withdrawal of 71 bcf of natural gas from storage for the week ending January 9. This figure falls significantly short of market expectations and is markedly lower than both the previous year’s draw and the five-year average, indicative of the milder weather conditions experienced earlier.

Total inventories currently amount to 3.185 tcf, remaining elevated compared to both the previous year’s figures and the seasonal average. In the coming years, the EIA anticipates that U.S. gas production will reach new record levels in 2026 and 2027. Meanwhile, domestic consumption is forecasted to decline, although this decrease will be somewhat balanced by consistent growth in LNG exports.

From a technical perspective, the market is experiencing significant short covering, as evidenced by a 29.11% decline in open interest coupled with a price increase of Rs 18.2. Natural gas exhibits support at Rs 328.3; a breach below this level would create potential for a decline towards Rs 305.7. On the upside, resistance is identified at Rs 368.1, and a decisive movement above this level could lead to an extension of gains toward Rs 385.3.