Natural gas prices concluded the trading session with an increase of 1.45%, reaching was bolstered by a storage injection that was smaller than the typical amount and predictions of persistently warm weather throughout the United States, especially with record-high temperatures anticipated in the Southwest over the weekend. The Commodity Weather Group anticipates that temperatures will exceed the average across almost the entire nation from September 1 to 10. This trend may bolster cooling demand and offer immediate support to prices.

However, robust domestic production continues to be a significant factor constraining potential gains, with Lower 48 output averaging a record 111.4 bcfd in August, in contrast to 110.7 bcfd in July. U.S. energy firms recorded an addition of merely 15 bcf of natural gas to storage for the week ending August 21, falling short of market expectations which anticipated an increase of 20 bcf, and significantly lagging behind the five-year average injection of 33 bcf. Total inventories increased to 3.184 tcf, which is 0.9% lower than the levels from a year ago, yet 5.5% higher than the five-year average. Gas flows to the nine major LNG export facilities decreased marginally to 17.1 bcfd from 17.2 bcfd in July, despite indications of a rebound in LNG demand.

The EIA anticipates an increase in U.S. dry gas production from 107.6 bcfd in 2025 to 111.2 bcfd in 2026, followed by a further rise to 116.0 bcfd in 2027. Concurrently, domestic consumption is projected to hit 92.0 bcfd in 2026 and 94.8 bcfd in 2027. LNG exports are anticipated to rise to 17.4 bcfd in 2026 and further to 18.6 bcfd in 2027. Speculative positioning has shown improvement, as NYMEX natural gas net short positions decreased to 46,024 contracts, marking a seven-week low. Additionally, combined net shorts across the four major markets fell by 27,238 contracts to 39,598.

Technically, the market is experiencing short covering, as evidenced by a 13.39% decline in open interest to 35,492 contracts, while prices have increased by Rs 4, suggesting a recovery amid the unwinding of bearish positions. Natural gas exhibits support at Rs 274.4; a breach of this threshold may lead to a decline in prices toward Rs 268.6. On the upside, resistance is positioned at Rs 283.6, and a sustained movement above this threshold could propel prices toward Rs 287.