Natural gas settled 0.82% lower at Rs 277.9, influenced by near-record production, adequate storage levels, and revised forecasts indicating milder weather over the upcoming two weeks. Average Lower 48 output was anticipated to decrease to a two-month low of 108.4 bcfd on Tuesday, while elevated temperatures through September 30 are expected to maintain demand for air conditioning and gas-fired power generation. Storage stood at 3.6% above the five-year average for the week ending September 11, a decrease from the 4.8% surplus observed in the prior week. This trend suggests that the inventory cushion is gradually diminishing, even in the face of robust production levels.

US energy firms added 40 bcf of natural gas to storage during the week ended September 4, surpassing market expectations for a 31-bcf build. This figure is also lower than the 69-bcf injection recorded a year earlier and below the five-year average increase of 52 bcf. Total inventories increased to 3.254 tcf, reflecting a 2.4% decline compared to the same period last year, yet standing 4.8% higher than the five-year average. Meanwhile, average flows to the nine major US LNG export facilities rose to 18.3 bcfd in September, up from 17.2 bcfd in August, contributing to additional demand support.

Equinor anticipates that gas storage within the European Union will achieve approximately 75% capacity by November. Presently, storage levels are at 68.2%, which is 16.2 percentage points lower than the five-year average. The US Energy Information Administration anticipates that natural gas supply and demand will achieve unprecedented levels by 2026. Dry gas production is anticipated to reach 111.2 billion cubic feet per day in 2026 and 116.0 bcfd in 2027, whereas domestic consumption is expected to be 92.0 bcfd and 94.8 bcfd for the same years, respectively.

LNG exports are anticipated to increase to 17.4 bcfd in 2026 and further to 18.6 bcfd in 2027. Technically, the market continues to experience long liquidation, evidenced by a 5.41% decline in open interest to 30,351, alongside a price decrease of Rs 2.3. Natural gas is currently encountering support at Rs 275. A decline beneath this threshold may pave the way toward Rs 272. Conversely, resistance is identified at Rs 283.4, with potential for prices to reach Rs 288.8 if this level is surpassed.