Natural gas concluded the trading session with a 2.07% increase, reaching Rs 301.2. This upward movement was bolstered by a decline in US production in recent weeks, attributed to disruptions in pipeline operations and heightened flows toward LNG export facilities. Additionally, there are anticipations regarding the return of a liquefaction train at Freeport LNG in Texas. In October, output from the US Lower 48 averaged 111.7 billion cubic feet per day, a decrease from the record highs of 113.3 bcfd observed in August and September. Projections indicate that daily production may decline to a four-month low of 108.9 bcfd, attributed to force majeure events and pipeline challenges in Kentucky, Texas, and West Virginia.
The December-November futures premium has contracted to an unprecedented low of approximately 28 cents per mmBtu, reflecting a subdued apprehension regarding the availability of winter supply. Lower 48 gas demand, including exports, is anticipated to decrease from 106.3 billion cubic feet per day this week to 104.5 billion cubic feet per day next week. Average flows to nine major US LNG export plants decreased to 16.9 bcfd in October, down from 17.9 bcfd in September and the record high of 18.8 bcfd observed in April. US natural gas inventories rose by 64 billion cubic feet for the week ending September 25, aligning with forecasts. This brings total stocks to 3.415 trillion cubic feet, which is 3.9% lower than the previous year but 2.4% higher than the five-year average.
The most recent injection surpassed last year’s 56 bcf build, yet it fell short of the five-year average of 80 bcf. Preliminary estimates suggest an injection of 79 bcf for the week ending October 2, which falls short of the five-year average of 96 bcf. The EIA anticipates an increase in US dry gas production, projecting a rise from 107.6 bcfd in 2025 to 111.2 bcfd in 2026, and further to 116.0 bcfd in 2027. Concurrently, domestic consumption is expected to reach 92.0 bcfd in 2026 and 94.8 bcfd in 2027. LNG exports are anticipated to hit 17.4 bcfd in 2026 and 18.6 bcfd in 2027.
Technically, the market is experiencing short covering, as evidenced by a 15.95% decline in open interest to 34,932, alongside a price increase of Rs 6.1. Natural gas exhibits support at Rs 297.5, with a potential decline below this level possibly leading to a test of Rs 293.8. Resistance is positioned at Rs 303.6, and a sustained movement above this threshold may result in a test of Rs 306.
