Natural gas concluded the trading session with an increase of 0.75%, reaching Rs 255.6. This uptick was bolstered by a slight rise in flows to liquefied natural gas export facilities and anticipations of heightened demand driven by weather conditions. Forecasts indicate a tendency for temperatures to remain predominantly above normal until August 21, potentially leading to an increase in petrol consumption within the power sector. Nonetheless, the potential for growth was constrained by pessimistic storage data and persistently robust domestic production.
U.S. energy firms recorded an addition of 33 billion cubic feet of natural gas to storage for the week ending July 31, surpassing market expectations of 31 bcf and the five-year average injection of 23 bcf. The build was also significantly higher than the 13 bcf injection recorded during the corresponding week last year. Total inventories increased to 3.117 trillion cubic feet, which is 0.4% lower than the previous year but 6.7% higher than the five-year average. The preceding week saw an injection of 28 bcf.
Production continued to hover at near-record levels, with Lower 48 dry gas output averaging 110.6 bcfd in August, slightly below the record of 110.7 bcfd set in July. Meanwhile, the demand for LNG feedgas has shown signs of weakening, with flows to nine major export plants averaging 16.9 bcfd compared to 17.2 bcfd in July. This decline can be attributed in part to reduced operations at Freeport LNG and Golden Pass. EIA anticipates that U.S. production will increase to 111.2 bcfd in 2026 and further to 115.3 bcfd in 2027. Concurrently, LNG exports are forecasted to reach 17.4 bcfd in 2026 and 18.6 bcfd in 2027.
Technically, the market is experiencing short covering, as evidenced by a 3.17% decline in open interest to 60,889, accompanied by a price increase of Rs 1.9. Natural gas exhibits a support level at Rs 252.3; a breach of this threshold may lead to a test of Rs 248.9. Resistance is positioned at Rs 258, and a sustained movement above this threshold could propel prices toward Rs 260.3.