Natural Gas settled 0.24% lower at Rs. 292 as warmer weather forecasts across most of the northern two-thirds of the United States dampened expectations for near-term heating demand. Prices encountered downward pressure due to a rebound in production, with output in the Lower 48 states averaging approximately 113.3 billion cubic feet per day in the past week, while monthly production was lower at 111.6 billion cubic feet per day.
Average gas flows to nine major LNG export terminals rose to 18.2 billion cubic feet per day in October, up from 17.9 billion cubic feet per day in September, offering some underlying support. US natural gas inventories rose by 77 billion cubic feet for the week ending October 16, falling short of market expectations of 79 billion cubic feet, the prior year’s increase of 86 billion cubic feet, and the five-year average of 87 billion cubic feet. Total inventories increased to 3.644 trillion cubic feet, which is 4% lower than the levels observed a year ago, yet 1% higher than the five-year average.
The Energy Information Administration projected dry gas production to increase to 112.2 billion cubic feet per day in 2026 and 116.1 billion cubic feet per day in 2027, while domestic consumption is expected to reach 92.4 billion 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. Goldman Sachs has revised its 2027 NYMEX natural gas price forecast downwards to $2.80 per million British thermal units, a decrease from the previous estimate of $3.50. This adjustment is attributed to robust production from the Permian Basin and an anticipated supply growth that surpasses projected demand growth by over 2 billion cubic feet per day.
The bank anticipates that the market will continue to be adequately supplied in the short term, sustaining a pessimistic medium-term perspective. Natural gas is currently experiencing a long unwinding phase, evidenced by a 1.09% decrease in open interest to 43,902 contracts, alongside a price decline of Rs. 0.70. Immediate support is positioned at Rs. 287.00, succeeded by Rs. 281.50, whereas resistance is established at Rs. 295.50. A sustained move above Rs. 295.50 could propel prices toward Rs. 299.50, while a breach below Rs. 287.00 may extend the downward trajectory toward Rs. 281.50.
