Natural gas experienced a decline of 3.58% yesterday, closing at Rs 296.3. This drop was influenced by a smaller-than-anticipated reduction in output and adequate storage levels, which overshadowed the positive impact of cooler weather forecasts. U.S. production in the Lower 48 states has averaged 106.4 billion cubic feet per day (bcfd) in October, showing a slight decrease from September’s 107.4 bcfd. Daily output is projected to reach a 13-week low of 104.7 bcfd.

In light of the recent decline, robust production levels earlier this year facilitated above-average storage injections, resulting in inventories that stand 5% above the five-year average at 3.561 trillion cubic feet. The recent report indicated a storage build of 53 bcf for the week ending September 26, which is below the five-year average of 85 bcf. This trend highlights strong demand driven by LNG exports and weather-related consumption. European gas prices have shown a decline as storage levels remain strong at 82.9% of capacity.

Notably, Italy, France, and Germany are all above 75%, alleviating concerns regarding winter supply. In the latest update, gas flows to U.S. LNG export facilities have averaged 16.1 bcfd this month, an increase from 15.7 bcfd in September, indicating strong export demand remains intact. The EIA anticipates that U.S. output and demand will reach unprecedented levels in 2025, projected at 106.6 bcfd and 91.5 bcfd, respectively, before experiencing a slight decline in 2026.

In the latest market update, fresh selling pressure is evident as open interest has increased by 50.61%, reaching 32,363, while prices have declined by Rs 11. Natural gas shows stability at Rs 289.3 and Rs 282.2, with resistance positioned at Rs 309.4. A breakthrough above this level may lead to a test of Rs 322.4.