Natural gas concluded the trading session with a decline of 3.73%, settling at Rs 304.8. This downturn was influenced by forecasts predicting warmer-than-normal weather extending into early November, which subsequently dampened expectations for heating demand. Mild temperatures through late October are anticipated to restrict both heating and cooling consumption, while diminishing expectations of a robust El Niño have further subdued the winter demand outlook. These bearish factors overshadowed the support provided by increasing liquefied natural gas exports and a decline in domestic production. In October, average gas flows to nine major US LNG export terminals rose to 18.2 billion cubic feet per day, up from 17.9 billion cubic feet per day in September.
Meanwhile, production in the Lower 48 states averaged 111.4 billion cubic feet per day, a decline from the record levels 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 anticipated an increase of 76 billion cubic feet, and also lagged behind 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 observed a year earlier, yet 1.3% higher than the five-year 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 increase to 92.4 billion cubic feet per day and 93.8 billion cubic feet per day, respectively. LNG exports are projected to increase to 17.6 billion cubic feet per day in 2026 and further to 18.6 billion cubic feet per day in 2027. However, stronger supply growth is anticipated to surpass the expansion of demand. Goldman Sachs has revised its 2027 Nymex natural gas price forecast downward to $2.80 per MMBtu from a previous estimate of $3.50, attributing this adjustment to increased production in the Permian region and a more favourable supply-demand equilibrium.
The bank anticipates that the market will continue to be adequately supplied in the near term, upholding a bearish perspective for the medium term. Natural gas is currently experiencing renewed selling pressure, as evidenced by a 50.3% increase in open interest, reaching 35,153 contracts, coupled with a price decline of Rs 11.8. Support is established at Rs 299.50, with an additional level at Rs 294.50. Conversely, resistance is identified at Rs 314.00, beyond which prices may approach Rs 323.50.
