Natural gas prices concluded the trading session with a 0.25% increase, reaching Rs 275.3. This uptick can be attributed to short covering following recent downturns, which were influenced by increased production, diminished liquefied natural gas export flows, and anticipations that Tropical Storm Bertha would lead to a temporary decline in energy demand along the US Gulf Coast. The storm is projected to approach the Louisiana coast, in proximity to Venture Global LNG’s Plaquemines export facility, prompting apprehensions regarding possible interruptions to LNG operations.
Despite these near-term uncertainties, forecasts indicating warmer-than-normal weather through early August are anticipated to sustain elevated electricity demand, as gas-fired power plants persist in fulfilling robust cooling needs. Fundamentally, the US natural gas market continues to be underpinned by robust demand, even in the face of unprecedented production levels. Average dry gas production in the Lower 48 states rose to 110.5 billion cubic feet per day in July. Concurrently, total gas demand, encompassing exports, is anticipated to increase from 111.0 bcfd this week to 111.6 bcfd next week.
According to the US Energy Information Administration, natural gas storage rose by 41 billion cubic feet to 3,024 bcf during the week ending July 10, aligning closely with market expectations. Storage is currently 0.7% lower than the level recorded last year, yet it is 6.4% higher than the five-year average, suggesting a supply situation that is relatively comfortable. The EIA anticipates that both production and consumption will achieve record highs in the coming two years. Additionally, LNG exports are forecasted to rise from 15.1 bcfd in 2025 to 17.4 bcfd in 2026, which will offer support for longer-term demand.
From a technical perspective, the market experienced short covering, evidenced by a 9.45% decline in open interest alongside an increase in prices. Immediate support is observed at Rs 273.7, succeeded by Rs 272.2. Resistance is positioned at Rs 277.7, and a sustained movement above this threshold may lead to further gains towards Rs 280.2.