Natural gas prices experienced a decline of 4.13%, settling at Rs 308.6. This movement was largely influenced by profit booking following recent gains, alongside a slight uptick in production levels. Market participants responded to the evolving supply and demand dynamics, even as the fundamentals continued to provide a supportive backdrop. According to LSEG, the average natural gas output in the U.S. In June, the Lower 48 states experienced a decrease in natural gas production, falling to 108.8 billion cubic feet per day from 109.7 billion cubic feet per day in May. Despite this decline, production remains historically robust, while recent output reductions have contributed to narrowing the inventory surplus to approximately 5% above normal levels, down from around 6% a week prior.

Weather forecasts persist in offering foundational backing to demand anticipations. Meteorologists anticipate that temperatures will stay above the usual levels until June 20, leading to a rise in electricity usage for air conditioning and an uptick in gas demand from power generators. Approximately 40% of electricity generation in the United States is derived from gas-fired power plants. LSEG projects that total gas demand, encompassing exports, will increase from 98.4 bcfd this week to 104.3 bcfd in the following two weeks.

However, LNG export demand experienced a slight decline as gas flows to major U.S. export terminals decreased to 16.4 bcfd in June, attributed to seasonal maintenance activities. In the latest reporting week, U.S. utilities added 95 billion cubic feet of gas to storage, falling short of market expectations which anticipated a build of 101 Bcf. Total inventories were recorded at 2.578 trillion cubic feet, marginally lower than the levels from the previous year, yet still well above the five-year average. Meanwhile, the U.S. Energy Information Administration has projected record natural gas production for 2026 and 2027. However, domestic demand is anticipated to moderate next year before experiencing a recovery thereafter.

Currently, the market is experiencing a phase of long liquidation, evidenced by a 28.85% decrease in open interest, bringing it down to 15,142 contracts, alongside a decline in prices. Natural gas is currently positioned with immediate support at Rs 303, and further declines may be anticipated towards Rs 297.3. Resistance is identified at Rs 318.6, and surpassing this threshold may lead to further increases towards Rs 328.5.