Natural gas futures concluded at Rs 264.4, reflecting a 0.65% increase, buoyed by a less-than-anticipated rise in U.S. natural gas storage. This development has bolstered expectations for a comparatively tighter supply in the near term. The latest report from the Energy Information Administration indicated that utilities injected 28 billion cubic feet of gas into storage for the week ending July 24, falling short of market expectations, which anticipated a 35 bcf build. Total working gas in storage increased to 3.084 trillion cubic feet, remaining 1% below year-ago levels but 6.4% above the five-year seasonal average, indicating that overall supply conditions remain comfortable despite the smaller inventory build. Market fundamentals exhibited a varied perspective.

The CFTC reported that natural gas speculators increased their net short positions by 5,281 contracts to 60,997 contracts, reflecting continued bearish positioning. According to LSEG, average U.S. Lower 48 dry gas production increased to 110.7 billion cubic feet per day in July, up from 110.0 bcfd in June, and continues to hover near record highs. Demand is anticipated to enhance steadily, with Lower 48 petrol consumption forecasted to increase from 111.8 bcfd this week to 112.8 bcfd in the forthcoming two weeks.

Meanwhile, LNG export flows moderated to 17.2 bcfd in July due to maintenance activities at various export facilities, marginally below the average observed in June. The EIA maintains its projections for unprecedented levels of production and consumption in the forthcoming years, estimating dry gas output to reach 111.2 bcfd in 2026 and 115.3 bcfd in 2027, with LNG exports anticipated to increase to 17.4 bcfd in the next year.

Technically, the market is experiencing short covering, as evidenced by a 5.4% decline in open interest to 50,721 contracts, coinciding with an upward movement in prices. Immediate support is positioned at Rs 261.8, with an additional level at Rs 259.2, while resistance is observed at Rs 267.8. A sustained breakout above this level could extend gains towards Rs 271.2.