Natural gas concluded the trading session with a decline of 3.58%, settling at Rs 261.1. This drop can be attributed to record production levels in the US, which prompted profit-taking following a rise that brought prices to a nearly four-week peak in the preceding session. The latest data from the Energy Information Administration indicated that US utilities contributed merely 16 billion cubic feet of gas to storage for the week ending August 14. This figure fell short of market expectations, which anticipated an injection of 19 bcf, as well as the 19 bcf recorded during the corresponding week last year and the five-year average of 29 bcf. Despite the relatively modest injection, inventories reached 3.169 trillion cubic feet, reflecting a 0.9% decrease compared to the previous year and approximately 6.2% above the five-year average.

Record output and mild spring weather have maintained inventories above the five-year average since March. However, warmer-than-normal temperatures are projected through September 3, which will bolster cooling demand. Average US Lower 48 gas output has achieved a historic high of 111.4 bcfd in August, surpassing the previous monthly record of 110.7 bcfd set in July. LSEG anticipates a decrease in Lower 48 demand, including exports, from 114.8 bcfd this week to 112.9 bcfd next week. Gas flows to major US LNG export plants averaged 17.2 bcfd in August, remaining largely unchanged from July but falling short of the June peak of 17.4 bcfd.

The EIA anticipates an increase in US dry gas production, projecting a rise from 107.6 bcfd in 2025 to 111.2 bcfd in 2026, and further to 116.0 bcfd in 2027. Concurrently, domestic consumption is expected to reach 92.0 bcfd in 2026 and 94.8 bcfd in 2027. LNG exports are projected to increase to 17.4 bcfd in 2026 and 18.6 bcfd in 2027, although the August forecast experienced a minor reduction owing to maintenance activities at Freeport LNG.

Fundamentally, robust production levels and high inventories continue to exert downward pressure, whereas milder weather conditions and increasing LNG exports offer some degree of support. Technically, the market is experiencing new selling pressure, evidenced by a 12.9% increase in open interest to 31,166 contracts, alongside a price decline of Rs 9.7. Support is positioned at Rs 257.7, with an additional level at Rs 254.2, whereas resistance is identified at Rs 267.1. A sustained move above Rs 267.1 could lead to a test of Rs 273.