Natural gas prices increased by 2.48% to close at Rs 309.9, bolstered by reduced domestic production levels, anticipations of heightened cooling demand, and short-covering activity in the futures market. Production in the Lower 48 states averaged 108.8 billion cubic feet per day in June, a decrease from 109.7 bcfd in May, which offers fundamental support to prices. Furthermore, weather forecasts suggesting predominantly above-normal temperatures until mid-June are anticipated to elevate electricity demand for air conditioning, consequently resulting in increased natural gas consumption by power generators.

Further support emerged from storage data indicating a marginally tighter-than-anticipated inventory build. According to the U.S. Energy Information Administration, utilities injected 92 billion cubic feet of gas into storage during the week ended May 22, which fell short of market expectations for a 95-bcf increase. The build was also lower than last year’s increase of 104 bcf and below the five-year average injection of 97 bcf for the same period. Despite the smaller build, overall storage levels remain relatively comfortable, positioned more than 6% above the five-year average.

Meanwhile, feedgas deliveries to major LNG export terminals decreased from 17.1 bcfd in May to approximately 16.0 bcfd in early June, attributed to seasonal maintenance at various facilities. Decreased demand for LNG exports has led to greater gas availability within the domestic market, which has somewhat mitigated the upward pressure from lower production levels and predictions of milder weather. Looking ahead, the U.S. Energy Information Administration forecasts that natural gas production will achieve unprecedented levels in the coming two years, increasing from 107.7 bcfd in 2025 to 110.6 bcfd in 2026 and further to 115.0 bcfd in 2027.

Demand is anticipated to moderate somewhat in 2026 prior to a rebound in 2027. Technically, the market is experiencing short covering, as evidenced by a 9.01% decline in open interest to 17,782 contracts, coinciding with an increase in prices. Immediate support is identified at Rs 303.7, with subsequent support at Rs 297.6. Resistance is positioned at Rs 313.9, and a breakout above this threshold may lead to further gains toward Rs 318.