Natural gas prices experienced a significant decline of 3.55%, closing at Rs 299. This drop can be attributed to robust storage levels and projections suggesting a weaker demand in the upcoming fortnight compared to earlier expectations. Market sentiment persisted in a bearish stance, even with forecasts indicating warmer-than-normal weather extending into early July. This trend was largely attributed to the prevalence of abundant inventories, which overshadowed the supportive factors typically associated with seasonal demand. Mild weather conditions during the spring allowed energy companies to inject larger-than-normal volumes into storage, maintaining inventories comfortably above historical averages.

According to LSEG, average natural gas production in the United States In June, natural gas production in the lower 48 states experienced a minor decline to 109.5 billion cubic feet per day from 109.7 billion cubic feet per day in May, yet it continues to hover close to historical highs. Demand forecasts have been adjusted downward, with total petrol consumption, inclusive of exports, anticipated to average 101.8 billion cubic feet per day this week and 105.7 billion cubic feet per day next week. However, warmer temperatures are anticipated to bolster cooling demand and elevate petrol consumption by power generators in the forthcoming weeks.

On the supply side, LNG exports exhibited resilience, with average flows to the nine major U.S. LNG export facilities increasing to 17.2 bcfd in June from 17.1 bcfd in May, as maintenance-related outages diminished. Recent storage data indicated an injection of 73 billion cubic feet for the week ending June 12, which was slightly below market expectations. However, this was adequate to elevate inventories to 2.759 trillion cubic feet, approximately 5.8% above the five-year average.

Looking ahead, the U.S. Energy Information Administration anticipates that both natural gas production and demand will achieve record highs in 2026 and 2027, bolstered by increasing LNG exports and consumption in the power sector. Technically, the market is experiencing long liquidation, as evidenced by a 25.09% decrease in open interest to 10,147 contracts alongside a decline in prices. Immediate support is observed at Rs 294.7, with additional weakness possibly extending toward Rs 290.3. Resistance is positioned at Rs 306.9, and a breach above this threshold may initiate a recovery towards Rs 314.7.