Natural gas prices climbed 0.68% to ₹267.3, driven by expectations of cooler temperatures in mid-February, which could increase heating demand. This rise comes despite near-term forecasts indicating milder conditions and reduced demand for the upcoming week. Investors are also reacting to a significant anticipated storage withdrawal following last week’s extreme cold in the U.S.
The impact of this cold spell was evident, pushing daily gas consumption to an all-time high of 181.2 billion cubic feet per day (bcfd) on January 21, surpassing the previous record of 168.4 bcfd set in January 2024. Consequently, the U.S. Energy Information Administration (EIA) reported a 321 billion cubic feet (bcf) withdrawal from storage, exceeding market expectations of 313 bcf. This reduction brought inventories down to 2,571 bcf, positioning storage levels 5.3% below last year and 4.1% under the five-year average.
Meanwhile, data from Baker Hughes (NASDAQ:BKR) revealed a slight drop in the U.S. natural gas rig count, which fell by one to 98. Market watchers are also tracking forecasts from LSEG, which predict total gas demand in the Lower 48 states will decline from 136.4 bcfd this week to 123.8 bcfd next week, before rebounding to 132.8 bcfd in the following week.
Looking ahead, the EIA projects U.S. dry gas production to rise to 104.5 bcfd in 2025 and 107.2 bcfd in 2026, while domestic consumption is expected to see a modest increase to 90.6 bcfd in 2025 before slightly declining to 90.4 bcfd in 2026.
From a technical standpoint, fresh buying interest is emerging, with open interest increasing by 0.14% to 18,297 contracts. Current support is at ₹264.4, with a potential decline to ₹261.6 if downward pressure intensifies. On the upside, resistance at ₹269.7 suggests a breakout could propel prices towards ₹272.2.
Natural gas remains a key player in the global energy market, with supply-demand dynamics and weather patterns driving price fluctuations. As investors monitor evolving conditions, strategic positioning in the market remains crucial.
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