Natural gas prices fell sharply by -4.17% to settle at ₹179.2, pressured by forecasts for milder weather and concerns about oversupply in storage, despite a surprise draw in U.S. inventories this week. The financial firm LSEG revised its estimate of cooling degree days (CDDs) over the next two weeks to 223, slightly down from the previous estimate of 227 CDDs, but still above the seasonal norm of 186 CDDs. This adjustment indicates expectations of reduced cooling demand, which could dampen natural gas consumption. LSEG also forecasted that average gas demand in the Lower 48 U.S. states, including exports, would rise slightly from 104.4 billion cubic feet per day (bcfd) this week to 106.5 bcfd next week.
Meanwhile, natural gas output in the Lower 48 states has decreased to an average of 102.4 bcfd so far in August, down from 103.4 bcfd in July, and below the record high of 105.5 bcfd set in December 2023. Globally, the mixed performance of Dutch and British gas wholesale prices reflects strong storage inventories, which have alleviated concerns about potential supply disruptions due to geopolitical tensions in Russia, Ukraine, and the Middle East. The U.S. EIA projected a larger-than-expected decline in natural gas production this year, with output averaging around 103.3 bcfd, slightly down from previous estimates.
Technically, the natural gas market is under fresh selling pressure, with a 17.92% increase in open interest to 39,738 contracts, while prices dropped by ₹7.8. Natural gas is currently supported at ₹176.1, with a potential test of ₹173 on further downside. Resistance is now likely at ₹184.4, and a move above this level could see prices testing ₹189.6.