Natural gas prices declined by 0.91% to close at Rs 271.6, influenced by substantial storage levels that dampened market sentiment. However, the potential for further declines appeared constrained due to reduced production and anticipations of heightened demand in the near term. In September, production in the Lower 48 states averaged 107.4 billion cubic feet per day, a decrease from August’s record high of 108.3. A preliminary forecast indicates a three-month low of 105.1 billion cubic feet per day, attributed to pipeline maintenance and reductions in output from significant producing states such as Texas, West Virginia, and Pennsylvania.

Storage data indicated that U.S. inventories increased by 71 bcf in the week ending September 5, marginally surpassing expectations of 68 bcf and significantly exceeding last year’s build of 36 bcf as well as the five-year average of 56 bcf. Current inventories are positioned 6% above the seasonal average, ensuring that the market remains adequately supplied in light of ongoing structural demand growth.

LNG feedgas flows decreased to 15.6 bcfd in September, down from 15.8 in August, as the Cove Point plant experienced a month-long maintenance shutdown, which further constrained near-term export demand. The EIA’s Short-Term Energy Outlook anticipates an increase in U.S. dry gas production, rising from 103.2 bcfd in 2024 to 106.6 bcfd in 2025, followed by a slight decrease in 2026. Concurrently, consumption is expected to reach a historic high of 91.5 bcfd in 2025, with a minor decline projected for 2026.

From a technical perspective, the market is experiencing long liquidation, evidenced by a decline in open interest of 13.07%, bringing it down to 23,115. Natural gas exhibits support at Rs 268.5; a decline beneath this level could see a test of Rs 265.5. Conversely, resistance is identified at Rs 276.4, with a potential upward breach aiming for Rs 281.3.