Natural gas declined by 2.4%, closing at Rs 268.9, influenced by near-record production levels and predictions of milder weather extending into early March. Above-average temperatures are anticipated throughout a significant portion of the U.S., which will constrain heating demand and enable utilities to maintain higher gas storage levels than what is customary for this season.

In February, output in the Lower 48 states averaged approximately 108.5 billion cubic feet per day, an increase from January’s 106.3 billion cubic feet per day and nearing the record set in December, with daily production recently reaching nearly 111 billion cubic feet per day. LNG demand provided a degree of support, as flows to major export terminals increased to 18.6 bcfd in February, exceeding January levels and poised to surpass the record set in December. Nevertheless, that robustness was insufficient to offset the ample supply and diminished demand expectations influenced by weather conditions.

Storage data indicated a withdrawal of 249 bcf for the week ending February 6, which, while slightly below expectations, significantly exceeded both last year’s draw and the five-year average. Total inventories currently amount to 2.214 tcf, reflecting a year-on-year decrease of 4.2% and a shortfall of 5.5% relative to the seasonal average. The Energy Information Administration projects that production will achieve record highs by 2026.

From a technical perspective, the market is experiencing long liquidation, evidenced by a 1.88% decline in open interest. Support is identified at Rs 264.3 and Rs 259.8, whereas resistance is positioned at Rs 274.9; a breakthrough above this level may aim for Rs 281.