Natural Gas prices experienced a decline of 1.67%, settling at Rs 277.10. This decrease was influenced by a larger-than-anticipated build in US storage and predictions of milder weather, which are expected to restrain heating demand as winter approaches. Meteorologists anticipate that temperatures throughout the majority of the United States will stay elevated above the seasonal average until November 13, which is likely to lead to a decrease in near-term consumption. US natural gas inventories rose by 80 billion cubic feet in the week ending October 23, surpassing market expectations of a 75 Bcf increase, bringing total stocks to 3.724 trillion cubic feet. Inventories stand at 3.8% lower than the levels observed a year ago, yet they exceed the five-year average by 1%.
Meanwhile, US natural gas production has rebounded to approximately 113.3 Bcf per day, following a decline to an average of 112.1 Bcf per day in October. LNG export flows also increased to 18.5 Bcf per day, compared with 17.9 Bcf per day in September, providing some demand support. The EIA anticipates an increase in US dry gas production, projecting it to reach 112.2 Bcf per day by 2026 and 116.1 Bcf per day by 2027. Concurrently, domestic consumption is expected to be 92.4 Bcf per day in 2026 and 93.8 Bcf per day in 2027. LNG exports are projected to rise to 17.6 Bcf per day in 2026 and further to 18.6 Bcf per day in 2027. However, rising production is anticipated to exceed the growth in demand, resulting in a more favourable supply scenario.
Goldman Sachs has revised its 2027 natural gas price forecast downward to $2.80 per MMBtu from the previous estimate of $3.50. This adjustment is attributed to robust production levels in the Permian Basin and an anticipated supply surplus that is expected to exceed 2 Bcf per day. The bank anticipates that the market will continue to be adequately supplied in the short term, with significant tightening likely postponed until 2029. Overall, the increase in production, ample inventories, and milder weather persist in exerting downward pressure on the short-term price outlook, although a rise in LNG exports may offer some degree of support.
Technically, the market is experiencing long unwinding, evidenced by a 4.04% decrease in open interest to 56,538 contracts, coupled with a price decline of Rs 4.70, which suggests the liquidation of existing long positions. Natural gas is currently finding support at Rs 272, below which prices could test Rs 267. On the upside, resistance is placed at Rs 281, and a sustained move above this level could push prices towards Rs 285.
