Natural gas concluded the trading session with a decline of 1.37%, settling at Rs 316.6. This decrease was primarily influenced by forecasts indicating milder temperatures for October, which diminished expectations for heating demand. This bearish sentiment overshadowed supportive factors such as lower-than-anticipated storage builds, strong LNG exports, and a reduction in domestic production. Mild weather is anticipated to continue through late October, as concerns related to El Niño persist, impacting the outlook for winter demand. Average gas flows to nine major US LNG export terminals rose to 18.1 billion cubic feet per day in October, up from 17.9 billion cubic feet per day in September.
Meanwhile, Lower 48 dry gas output averaged 111.3 billion cubic feet per day, a decrease from the record highs of 113.3 billion cubic feet per day observed in August and September. US natural gas inventories saw 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 lagged behind the previous week’s injection of 85 billion cubic feet. The build was also beneath the five-year seasonal average of 90 billion cubic feet. Total inventories reached 3.567 trillion cubic feet, which is 3.9% lower than the levels recorded a year earlier, yet 1.3% higher than the five-year average.
The US Energy Information Administration projected dry gas production to rise from 107.6 billion cubic feet per day in 2025 to 112.2 billion cubic feet per day in 2026 and further to 116.1 billion cubic feet per day in 2027. Domestic consumption is projected to increase from 91.9 billion cubic feet per day in 2025 to 92.4 billion cubic feet per day in 2026, and further to 93.8 billion cubic feet per day in 2027. LNG exports are anticipated to attain 17.6 billion cubic feet per day in 2026 and 18.6 billion cubic feet per day in 2027. Despite increasing demand, a more robust supply growth is anticipated to maintain a balanced market.
Goldman Sachs has revised its 2027 NYMEX natural gas price forecast downward to $2.80 per MMBtu from the previous estimate of $3.50. This adjustment is attributed to increased production in the Permian Basin and an anticipated supply growth that is expected to surpass demand growth by over 2 billion cubic feet per day. The bank anticipates significant market tightening will occur only as we approach 2029. Natural gas is currently experiencing new selling pressure, evidenced by a 25.66% rise in open interest to 23,389 contracts, coupled with a decline in prices of Rs. 4.4. Support is positioned at Rs 314.00, with subsequent support at Rs 311.50. Resistance is identified at Rs 319.50, beyond which prices may approach Rs 322.50.
