Natural gas settled 0.49% higher at Rs. 285, buoyed by predictions of cooler weather in late November, unprecedented gas flows to liquefied natural gas export facilities, and a recent downturn in US production. As reported by LSEG, the average natural gas production in the US Lower 48 states has decreased to 111.6 billion cubic feet per day in November, down from 113.4 bcfd in October and a peak of 115.0 bcfd in August. In the week ending October 30, US natural gas inventories saw an increase of 77 billion cubic feet, falling short of market expectations which had anticipated a rise of 81 billion cubic feet.
This adjustment brings total storage levels to 3.801 trillion cubic feet. Inventories were recorded at 2.8% lower than the levels observed a year prior, yet they exceeded the five-year average by 1.4%. The storage surplus is anticipated to enhance to 2.1% above normal, suggesting a favourable supply situation as winter approaches. The US Energy Information Administration has projected that both production and consumption will reach record levels in 2026 and 2027. Dry gas production is projected to rise from 107.6 billion cubic feet per day in 2025 to 112.2 bcfd in 2026 and further to 116.1 bcfd in 2027.
Concurrently, domestic consumption is anticipated to increase from 91.9 bcfd to 92.4 bcfd and 93.8 bcfd in the same years, respectively. LNG exports are anticipated to rise from a record 15.1 bcfd in 2025 to 17.6 bcfd in 2026 and further to 18.6 bcfd in 2027, thereby offering supplementary demand support. However, the medium-term outlook remains pessimistic as Goldman Sachs has revised its 2027 Nymex natural gas price forecast down to $2.80 per MMBtu from $3.50, attributing this adjustment to increased production in the Permian Basin and the anticipation that US supply growth will surpass demand growth by over 2 bcfd.
The bank anticipates that favourable market conditions will continue in the years ahead, which may postpone a substantial adjustment in supply-demand balances until 2029. Technically, the market is experiencing new buying activity, as open interest has risen by 1.48% to 51,727 contracts, accompanied by a price increase of Rs. 1.40. Natural gas is presently encountering support at Rs. 281.50, with subsequent support at Rs. 278.50. At the same time, resistance is established at Rs. 287. A sustained move above this level could extend the recovery toward Rs. 289.
