Natural gas prices concluded the trading session at Rs 265.4, reflecting a decline of 0.38%. This decrease is attributed to diminished LNG export flows, nearly unprecedented production levels, and anticipations of reduced demand in the forthcoming fortnight. In August, gas output in the U.S. Lower 48 states averaged 111.1 billion cubic feet per day, surpassing July’s record of 110.7 billion cubic feet per day, thereby maintaining a robust supply.
Inventories have consistently exceeded the five-year average since March, with projections indicating that stocks will be 6.6% higher than the norm for the week ending August 7. However, warmer-than-normal temperatures thru August 26 are anticipated to support gas demand from power generators, with approximately 40% of U.S. electricity generation originating from gas-fired plants. LSEG anticipates a decrease in Lower 48 demand, including exports, from 114.2 bcfd this week to 110.5 bcfd in the following week. CFTC data indicated that speculative net-short positions rose by 28,093 contracts, reaching a total of 89,090 contracts.
This shift underscores a pronounced bearish sentiment, driven by high inventory levels and robust production rates. U.S. petrol inventories rose by 33 bcf in the week ending July 31, surpassing the anticipated figure of 31 bcf and the five-year average injection of 23 bcf. Total storage reached 3.117 trillion cubic feet, which is 6.7% above the five-year average. The EIA anticipates that dry gas production will achieve 111.2 billion cubic feet per day in 2026 and 115.3 bcfd in 2027. Concurrently, LNG exports are forecasted to be 17.4 bcfd and 18.6 bcfd for the respective years.
Technically, the market is experiencing new selling pressure, as open interest increased by 0.48% to 45,565 contracts, accompanied by a price decline of Rs 1. Natural gas is currently encountering support at Rs 262.3, and a breach of this threshold may reveal a decline toward Rs 259.2. On the upside, resistance is positioned at Rs 268.9; a sustained move above this level could initiate a recovery toward Rs 272.4.
