Natural gas settled 1.19% higher at Rs 263.7, bolstered by projections for heightened demand due to the anticipated continuation of hotter-than-normal weather across the United States thru August 29, which is likely to elevate air-conditioning requirements from power generators. Average US Lower 48 gas output increased to 111.3 billion cubic feet per day in August, exceeding July’s monthly record of 110.7 bcfd. Despite elevated summer temperatures, robust production and mild spring weather have maintained inventories above the five-year average since March.
US energy firms added 36 billion cubic feet of gas to storage in the week ended August 7, surpassing market expectations of 31 bcf, although it fell short of the 49 bcf injection recorded during the corresponding week last year. Total inventories rose to 3.153 trillion cubic feet, reflecting a 0.8% decrease compared to the same period last year, yet standing 6.7% higher than the five-year average. Projected Lower 48 gas demand, encompassing exports, is anticipated to decrease from 115.5 bcfd this week to 113.1 bcfd next week and further to 111.9 bcfd in two weeks.
Concurrently, average gas flows to the nine major US LNG export facilities have moderated to 17.1 bcfd in August, down from 17.2 bcfd in July and a peak of 17.4 bcfd in June. The EIA anticipates that US dry gas production will attain 111.2 bcfd in 2026 and 116.0 bcfd in 2027, with domestic consumption estimated at 92.0 bcfd and 94.8 bcfd for the same years, respectively. LNG exports are projected to increase to 17.4 bcfd in 2026 and 18.6 bcfd in 2027, although the 2026 projection has been modestly adjusted downward due to maintenance activities at Freeport LNG.
Technically, the market is experiencing short covering, evidenced by a decline in open interest of 11.23% to 41,289 contracts, while prices have increased by Rs 3.1. Natural gas exhibits support at Rs 261.3, with a breach beneath this level likely to test Rs 258.8. Resistance is positioned at Rs 266.3, and a sustained move above this threshold may propel prices toward Rs 268.8.
