Predictions of lower demand and higher output caused natural gas prices to decline

Forecasts predicting a loss in demand and an increase in supply due to the expectation of warmer-than-normal weather in late January caused natural gas to dip significantly, falling by -4.47% to settle at 243.7. Although the extreme cold weather drove spot power and petrol prices to multi-year highs, the futures market was impacted by expectations of milder weather in the upcoming weeks, which resulted in the significant price decline.

The daily demand for petrol increased due to the recent cold period, and it might have reached a record high on Tuesday. But the average petrol output in the Lower 48 states fell from the monthly record of 108.5 billion cubic feet per day (bcfd) in December to 104.8 bcfd so far in January.

Although Monday’s production was expected to reach an initial 11-month low of 97.1 bcfd, it was much less than that of the two prior severe weather events in December 2022 and February 2021. According to meteorological forecasts, the Lower 48 states will experience a change in weather patterns from January 15–21, when temperatures will be below average, to January 22–30, when they will be above average.

An increase in open interest of 0.07% to settle at 15108 indicates that, from a technical standpoint, the natural gas market is seeing new selling pressure. There’s a pessimistic attitude seen in the -11.4 rupee price decrease.

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