Natural gas prices increased by 3.78%, closing at Rs 274.5, driven by a blend of constrained supply conditions and robust export demand. The increase was mainly attributed to a storage build that was less than anticipated, reduced production rates, and nearly unprecedented LNG exports. The EIA reported a storage injection of 79 Bcf for the week ended April 24, which was slightly below expectations and significantly lower than the previous week’s 103 Bcf and the 105 Bcf addition recorded a year ago. This suggests relatively tighter supply conditions in the near term.

Production trends have also bolstered prices, with output decreasing by nearly 2.0 bcfd over the past few days, reaching a 12-week low of 107.6 bcfd, as major producers reduced supply in response to previous weak price realizations. In April, LNG export feedgas flows rose to 18.8 bcfd, exceeding the prior monthly record, indicative of strong global demand for US natural gas.

Nonetheless, in light of these favorable elements, the prevailing market sentiment appears to be relatively stable, as total inventories increased to 2.142 trillion cubic feet, reflecting a 5.7% rise compared to the previous year and a 7.7% elevation above the five-year seasonal average, underscoring adequate supply reserves. In the future, the EIA anticipates that US natural gas production will reach unprecedented heights by 2026, whereas domestic consumption is forecasted to experience a minor decline before rebounding in 2027. The outlook for LNG exports indicates a sustained increase, ensuring ongoing demand in the long term.

The market is currently experiencing short covering, as evidenced by a significant decline in open interest of 25.8% to 20,653 lots, alongside a price increase of Rs 10. Immediate support is identified at Rs 267.3, with potential further decline toward Rs 260.1. On the upside, resistance is positioned at Rs 278.9, and a breakout above this level may drive prices toward Rs 283.3.