Natural gas concluded the trading session with a decline of 2.42%, settling at Rs 298.6. This downturn was influenced by persistently mild weather conditions, projections indicating lower demand than earlier anticipated, and a modest rebound in production levels. As reported by LSEG, the average natural gas output in the contiguous United States has decreased from the record levels of 113.3 billion cubic feet per day observed in August and September to 110.8 billion cubic feet per day thus far in October. This decline is primarily attributed to disruptions in production from the Gulf of Mexico and various pipeline challenges. However, average gas demand, including exports, is expected to increase from 103.87 billion cubic feet per day this week to 106.8 billion cubic feet per day over the following two weeks as colder weather approaches.
Average gas flows to major US liquefied natural gas export plants decreased to 17.6 billion cubic feet per day in October, down from 17.9 billion cubic feet per day in September. However, daily feedgas flows were anticipated to hit a five-month high of 18.9 billion cubic feet per day. US natural gas inventories experienced an increase of 67 billion cubic feet for the week ending October 9. This figure fell short of market expectations, which had anticipated an injection of 76 billion cubic feet, and also represented a decline from the previous week’s injection of 85 billion cubic feet. Total storage increased to 3.567 trillion cubic feet, which is 3.9% lower than the levels from a year ago, yet 1.3% higher than the five-year seasonal average.
The US Energy Information Administration projected dry gas production to rise to 112.2 billion cubic feet per day in 2026 and 116.1 billion cubic feet per day in 2027, while domestic consumption is forecast to reach 92.4 billion and 93.8 billion cubic feet per day, respectively. LNG exports are projected to rise to 17.6 billion cubic feet per day in 2026 and further to 18.6 billion cubic feet per day in 2027. Goldman Sachs has revised its 2027 natural gas price forecast downward to $2.80 per million British thermal units, a decrease from the previous estimate of $3.50. This adjustment is attributed to robust production growth and an improved balance between supply and demand.
The bank anticipates that supply will surpass demand growth by over 2 billion cubic feet per day, thereby strengthening the medium-term bearish outlook. Natural gas is currently experiencing new selling pressure, as evidenced by a 47.26% rise in open interest to 46,925 contracts, alongside a price decrease of Rs 7.4. Support is positioned at Rs 291, with an additional level at Rs 283.50, whereas resistance is identified at Rs 306.50. A sustained move above this level could push prices toward Rs 315.
