Natural gas prices increased by 1.29% to close at Rs 282.7, buoyed by short covering following recent downturns. However, the overall fundamental perspective continues to be shaped by increasing domestic production and diminished demand for LNG exports. Maintenance work at Freeport LNG’s export facility in Texas has continued to restrict gas flows for liquefaction, thereby increasing supplies available for the domestic market. The facility is anticipated to stay under maintenance until late August, which will constrain export demand, even as ongoing geopolitical disruptions continue to impact LNG shipments through the Persian Gulf.
Supply conditions remained favourable as average natural gas production in the Lower 48 states rose to 110.2 billion cubic feet per day in July, up from 110.0 bcfd in June. Simultaneously, near-record levels of solar and wind power generation persisted in diminishing the reliance on natural gas for electricity generation. Storage data indicated a robust supply, as the U.S. Energy Information Administration reported a larger-than-anticipated storage injection of 61 billion cubic feet for the week ending July 3. This figure surpassed market expectations of 49 bcf and exceeded the five-year average of 51 bcf.
Total working gas in storage reached 2.983 trillion cubic feet, which is 0.5% lower than last year’s level but 6.6% higher than the five-year average. Looking ahead, the EIA anticipates that U.S. natural gas production and demand will achieve record highs over the next two years. Additionally, LNG exports are projected to increase gradually from 15.1 bcfd in 2025 to 17.4 bcfd in 2026 and 18.6 bcfd in 2027.
Natural gas is currently experiencing short covering, evidenced by a 5.06% decline in open interest alongside rising prices, which suggests the unwinding of bearish positions. Immediate support is positioned at Rs 278.6, succeeded by Rs 274.6, whereas resistance is identified at Rs 285.2 and Rs 287.8. A sustained move beyond these levels will likely determine the market’s next short-term direction.