Natural Gas prices continued their upward trajectory, closing 0.67% higher at Rs 316, buoyed by predictions of warmer weather throughout the United States and anticipated increases in cooling demand in the weeks ahead. Rising temperatures are anticipated to elevate electricity consumption for air conditioning, consequently enhancing natural gas demand from power generators. With approximately 40% of electricity generation in the United States originating from gas-fired plants, demand influenced by weather patterns continues to be a significant factor affecting prices. Market sentiment was bolstered by a smaller-than-expected storage injection, suggesting that supply additions were not as robust as anticipated despite the shoulder season.

According to the U.S. Energy Information Administration, natural gas inventories experienced an increase of 92 billion cubic feet during the week ending May 22, which was marginally below market expectations of a 95 bcf build. The increase was also lower than the 104 bcf injection recorded during the same period last year and below the five-year average build of 97 bcf. Meanwhile, average gas production in the Lower 48 states declined to 109.5 billion cubic feet per day in May from 109.8 bcfd in April, indicating a slight contraction in supply conditions. Weather forecasts suggest elevated temperatures persisting until mid-June, reinforcing anticipations of increased consumption within the power sector.

Germany’s gas storage levels have shown improvement, now at 31% of capacity, indicative of the continuous replenishment efforts in preparation for the winter season. Looking ahead, the EIA forecasts that U.S. dry gas production will increase to a record 110.6 bcfd in 2026 and further to 115 bcfd in 2027, driven by expansion in the Permian and Haynesville regions. However, domestic consumption is anticipated to experience a modest decline in 2026, followed by a recovery in 2027.

Technically, the market is experiencing short covering, as evidenced by a 2.57% decline in open interest to 19,517 contracts, coinciding with an increase in prices. Immediate support is identified at Rs 311.8, with subsequent support at Rs 307.7. Resistance is positioned at Rs 321.2, and a sustained movement above this threshold could pave the way toward Rs 326.5.