Natural gas prices increased by 3.06% to close at Rs 306.6, driven mainly by enhanced LNG export activity and anticipations of heightened demand due to weather conditions. Market sentiment exhibited an uptick as flows to U.S. LNG export terminals rose by 13.2% week-on-week, achieving a six-week peak of 19.3 billion cubic feet per day. Additionally, forecasts for rising temperatures through early July are anticipated to elevate cooling demand, thereby enhancing natural gas consumption within the power generation sector. Despite the price recovery, abundant domestic supplies continue to constrain the upside potential.

U.S. natural gas inventories were recorded at 2.686 trillion cubic feet as of June 5, which is roughly 6% above the five-year seasonal average, indicating a favourable supply situation. The U.S. Energy Information Administration reported that utilities injected 108 billion cubic feet of gas into storage during the latest week, exceeding market expectations of a 99 billion cubic feet build. The injection surpassed the five-year average increase of 95 billion cubic feet for the same period, suggesting persistent robustness in supply fundamentals.

Looking ahead, the U.S. Energy Information Administration anticipates that both natural gas production and consumption will attain unprecedented levels in the forthcoming years. Dry gas production is projected to rise from 107.7 billion cubic feet per day in 2025 to 111.0 billion cubic feet per day in 2026, ultimately reaching 113.6 billion cubic feet per day in 2027. Domestic demand is projected to increase consistently, bolstered by rising consumption in the power sector and the expansion of industrial activity.

Furthermore, LNG exports are anticipated to increase from a record 15.1 billion cubic feet per day in 2025 to 17.2 billion cubic feet per day in 2026, representing a substantial driver of demand growth. Technically, the market is experiencing short covering, as evidenced by an 8% decline in open interest alongside rising prices. Natural gas exhibits immediate support at Rs 299, with subsequent support at Rs 291.5. Resistance is identified at Rs 311.2, and a sustained movement beyond this threshold may facilitate further gains towards Rs 315.9.