Natural gas prices concluded the trading session with a decline of 2.8%, settling at Rs 260.6. This decrease can be attributed to robust production levels in the U.S. and sufficient storage inventories, which overshadowed the persistent demand influenced by weather conditions in the power sector. Hotter-than-normal weather is anticipated to continue until August 28, which will bolster electricity consumption for air conditioning and constrain the potential decline in petrol prices. Average U.S. Lower 48 production rose to 111.2 billion cubic feet per day in August, surpassing the July monthly record of 110.7 bcfd. This increase in output, coupled with relatively mild spring weather, has maintained inventories above the five-year average since March.

U.S. natural gas storage experienced an increase of 36 billion cubic feet for the week ending August 7, surpassing market expectations of 31 bcf as well as the five-year average injection of 33 bcf. Total stockpiles reached 3.153 trillion cubic feet, reflecting a 0.8% decrease from the previous year while remaining 6.7% above the five-year average. Average gas demand in the Lower 48 states, inclusive of exports, is projected to decrease from 115.4 billion cubic feet per day this week to 112.5 billion cubic feet per day next week. Concurrently, the volume of gas directed to the nine principal U.S. LNG export facilities has diminished to 17.1 billion cubic feet per day in August, down from 17.2 billion cubic feet per day in July and a peak of 17.4 billion cubic feet per day in June.

The U.S. Energy Information Administration anticipates that both production and domestic consumption will achieve unprecedented levels in 2026, with dry gas output projected at 111.2 bcfd and consumption at 92.0 bcfd. LNG exports are anticipated to increase to 17.4 bcfd in 2026 and 18.6 bcfd in 2027, although the most recent forecast has been marginally adjusted downward owing to maintenance activities at Freeport LNG. Despite robust production levels, persistent heat and demand from the power sector offer a short-term buffer, whereas high inventory levels continue to exert bearish pressure.

Technically, the market is experiencing renewed selling pressure, as evidenced by an 8.3% increase in open interest to 46,513 contracts, coupled with a Rs 7.5 decrease in prices. Natural gas is encountering support around Rs 257.5, and a breach beneath this threshold may reveal Rs 254.5. On the upside, resistance is positioned at Rs 265.6, and a sustained movement above this threshold may initiate a recovery toward Rs 270.7.