Natural gas prices experienced a decline of 1.25%, concluding at Rs 307.8. This movement was primarily driven by expectations of above-normal storage levels, which overshadowed the support provided by warmer weather forecasts and consistent LNG export demand. Despite forecasts for above-average temperatures through July 23, which are anticipated to elevate cooling demand and enhance gas consumption for electricity generation, traders continued to concentrate on substantial inventory levels. Financial data from LSEG indicated that average dry gas production in the U.S. has been recorded.

The Lower 48 states experienced a decline in gas production, easing to 109.4 billion cubic feet per day in July from 110.0 bcfd in June. Meanwhile, total gas demand, which includes exports, is anticipated to remain stable at 109.8 bcfd over the forthcoming two weeks. LNG exports exhibited resilience, as average gas flows to the nine principal U.S. export terminals increased to 17.8 bcfd in July, up from 17.4 bcfd in June, albeit remaining beneath the peak of 18.8 bcfd attained in April. According to the U.S. Energy Information Administration, working gas in storage rose by 87 billion cubic feet to 2,922 Bcf for the week ending June 26.

Inventories are currently 23 Bcf lower than the levels observed a year ago, yet they exceed the five-year average by 175 Bcf, suggesting a favourable supply situation. The EIA also reaffirmed its outlook for record U.S. natural gas production and demand in the coming years, forecasting production to rise to 111.0 bcfd in 2026 and 113.6 bcfd in 2027, while domestic consumption and LNG exports are also expected to reach new highs.

Technically, the market is experiencing long liquidation, as evidenced by a 12% decline in open interest in conjunction with falling prices. Immediate support is established at Rs 303.1, with additional downside potential toward Rs 298.4. Resistance is identified at Rs 316.6, with a subsequent level at Rs 325.4 should buying momentum increase.