Natural Gas yesterday settled higher by 2.13% at Rs 263.9 following the U.S. Energy Information Administration’s report of a smaller-than-expected increase in natural gas storage levels, which bolstered bullish market sentiment. Utilities injected 63 billion cubic feet of gas into storage during the week ended May 1, which fell short of market expectations of 74 bcf. This figure also represents a decrease compared to last year’s 104 bcf build and is below the five-year average increase of 77 bcf. The unexpectedly tight inventory data underscored the strengthening near-term supply-demand dynamics within the U.S. gas market.

Additional support emerged from declining production trends across the Lower 48 states, where output is anticipated to reach a one-week low as weak spot prices led producers, including EQT Corporation, to curtail supply while awaiting better price realizations. Weather forecasts suggested predominantly seasonal conditions until May 22, with cooling demand progressively starting to surpass heating demand. In the interim, gas flows to prominent U.S. LNG export facilities have moderated somewhat from the peak levels observed in April, attributable to standard seasonal maintenance operations.

Despite short-term robustness, the overall perspective from the EIA continued to exhibit a mixed sentiment. The agency anticipates that U.S. dry gas production will increase from a record 107.7 billion cubic feet per day in 2025 to 109.6 billion cubic feet per day in 2026, and subsequently to 112.6 billion cubic feet per day in 2027. Nonetheless, domestic gas demand is projected to decrease from 91.9 bcfd in 2025 to 90.6 bcfd in 2026, followed by a recovery in 2027. LNG exports are anticipated to maintain a consistent upward trajectory in the years ahead.

From a technical perspective, the market is experiencing new buying activity, evidenced by a 5.1% rise in open interest to 29,071 contracts, alongside a price increase of Rs 5.5. Natural gas exhibits immediate support levels at Rs 256 and Rs 248.1, with resistance identified at Rs 268.9 and Rs 273.9.