Natural gas settled higher by 0.97% at Rs 280.5, buoyed by unseasonably warm weather in parts of the Midwest and eastern United States. This climatic condition sustained elevated cooling demand and prompted power generators to increase their consumption of gas for electricity generation. Average US Lower 48 gas production rose to 112.9 billion cubic feet per day in September, up from 112.2 bcfd in August, underscoring robust supply dynamics.
However, LSEG anticipates that average Lower 48 demand, inclusive of exports, will decrease to 107.6 bcfd next week, down from 109.7 bcfd this week. Average gas flows to the nine major US LNG export plants increased to 18.1 bcfd in September, up from 17.2 bcfd in August, although they still fall short of the record 18.8 bcfd achieved in April. US natural gas inventories rose by 30 Bcf in the week ending August 28, reaching 3,214 Bcf. Although stocks were 50 Bcf lower compared to the same period last year, they remained 160 Bcf above the five-year average of 3,054 Bcf, suggesting a comfortable overall storage situation.
The EIA anticipates that both US natural gas supply and demand will achieve unprecedented levels by 2026. Dry gas production is anticipated to reach 111.2 bcfd in 2026 and 116.0 bcfd in 2027, an increase from 107.6 bcfd in 2025. Concurrently, domestic consumption is expected to be 92.0 bcfd in 2026 and 94.8 bcfd in 2027. LNG exports are projected to increase to 17.4 bcfd in 2026 and 18.6 bcfd in 2027, although the most recent forecast has been marginally adjusted downward owing to maintenance activities at Freeport LNG.
Technically, the market is experiencing short covering, evidenced by a significant decline in open interest of 18.52% to 33,406 contracts, alongside a price increase of Rs 2.7, which suggests the covering of existing short positions. Natural gas is presently encountering support around Rs 276.4, and a persistent breach beneath this threshold may lead to further declines toward Rs 272.2. On the upside, immediate resistance is positioned at Rs 283.6, while a decisive move above this level could bolster the recovery toward Rs 286.6.
