Natural gas settled lower by 2.91% at Rs 303.9, influenced by a slight uptick in daily production, predictions of milder weather conditions, and anticipations of reduced demand in the upcoming week. As reported by LSEG, the average natural gas production in the contiguous United States decreased to 110.8 billion cubic feet per day in October, down from the record high of 113.3 bcfd observed in August and September. This decline can be attributed to factors such as shut-ins related to Hurricane Isaias, incidents of force majeure, and disruptions in pipeline operations.
US natural gas inventories rose by 85 billion cubic feet in the week ending October 2, surpassing the preliminary estimate of 79 bcf. This increase brings total stocks to 3.500 trillion cubic feet, which is 3.6% lower than the levels recorded a year ago. Storage levels were estimated at 1.6% above the five-year average for the week ended October 9, suggesting a relatively comfortable supply position. Average gas flows to nine major US liquefied natural gas export terminals decreased to 17.5 bcfd in October, down from 17.9 bcfd in September, thereby diminishing a crucial source of demand support.
The US Energy Information Administration projected natural gas production to rise to 112.2 bcfd in 2026 and 116.1 bcfd in 2027, while domestic consumption is expected to increase to 92.4 bcfd and 93.8 bcfd, respectively. LNG exports are projected to attain 17.6 billion cubic feet per day in 2026 and 18.6 billion cubic feet per day in 2027. Goldman Sachs has revised its 2027 Nymex natural gas price forecast downwards to $2.80 per MMBtu, a decrease from the previous estimate of $3.50. This adjustment is attributed to anticipated increases in Permian production and a supply growth that is projected to outpace demand growth by over 2 bcfd.
The bank anticipates that the US market will continue to be adequately supplied in the short term, which will constrain the potential for price recovery until demand growth begins to tighten the supply-demand equilibrium. Technically, the market is experiencing new selling pressure, as open interest has increased by 23.32% to 33,896 contracts, while prices have decreased by Rs 9.1. Natural gas exhibits a support level at Rs 298; a breach of this threshold may lead prices to test Rs 292. Resistance is positioned at Rs 313.50, and a sustained movement above this threshold could propel prices toward Rs 323.50.
