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Natural gas prices experienced a significant decline of -4.1% in the previous session, closing at 245.8, primarily due to a confluence of factors that impacted the market. Record-high production, mild weather conditions, and a larger-than-expected storage build were the key contributors to this bearish trend. The US Energy Information Administration (EIA) reported that US utilities injected 97 billion cubic feet (bcf) of natural gas into storage last week, surpassing market expectations of an 80 bcf increase. Furthermore, natural gas production reached 103.6 bcfd in October, surpassing the previous record of 103.1 bcfd in July, indicating an abundance of supply in the market.
Exports to Mexico, which had hit record levels in September, declined in October, although there are expectations of an upturn with the commencement of liquefied natural gas (LNG) exports from New Fortress Energy’s plant. Looking ahead, forecasts for mild weather conditions extending into early November are expected to keep heating and cooling demands subdued, further pressuring natural gas prices.
On the technical front, the market has witnessed a notable increase in open interest, rising by 14.93% to settle at 32,758. Prices have declined by -10.5 rupees, indicating strong selling pressure. The support level for natural gas is currently at 241.5, with a potential test of 237.2 if this level is breached. Conversely, the resistance level is at 253.6, and a break above this point could lead to a test of 261.4.
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