Warmer Weather Projections In Late January Are Likely To Bring Down Natgas Prices.

Natural gas prices experienced a significant decline of -4.65%, settling at 225.5, driven by forecasts predicting a drop in demand and increased output with the anticipation of warmer-than-normal weather in late January. The decrease was also influenced by a reduction in the flow of gas to U.S. liquefied (LNG) export plants, hitting a one-year low as energy firms likely redirected gas to the domestic market following a surge in U.S. power gas prices due to extreme cold weather.

The extreme cold not only led to a record-high daily gas demand but also froze wells, cutting gas supplies and causing a decline in average gas output in the Lower 48 states. Despite a significant daily drop in U.S. gas output to a 12-month low of 90.6 bcfd, it was still less severe than losses experienced during previous winter storms. Meteorological projections indicate a shift from colder-than-normal temperatures to mostly warmer conditions from Jan. 22-Feb. 1, prompting financial company LSEG to forecast a decline in U.S. gas demand from 154.2 bcfd to 140.7 bcfd. 

From a technical perspective, the market witnessed fresh selling, marked by a 42.64% increase in open interest, settling at 17237. Prices are currently down -11 rupees, with natural gas finding support at 217.8. A breach below this level could lead to a test of 210.1, while resistance is expected at 239.7, and a move above could result in prices testing 253.9.