Natural gas prices took a noticeable hit recently, dropping by 1.67% to close at Rs 277.10. The drop came right after weekly US storage data revealed a much bigger build than traders expected. On top of that, weather forecasts are calling for milder temperatures, which means people simply will not need to turn up their heaters as much just yet.
Weather experts say most parts of the United States will see warmer-than-usual days through November 13. Because of this mild spell, immediate fuel consumption is bound to take a step back. Government data showed that US natural gas stockpiles grew by 80 billion cubic feet (Bcf) during the week ending October 23. That was higher than the market prediction of 75 Bcf. With this jump, total gas in storage reached 3.724 trillion cubic feet. While current inventory levels are still 3.8% below where they stood this time last year, they sit about 1% above the five-year average.
Supply Output and Export Trends
At the same time, gas production across the US is picking up speed again. Output climbed back up to roughly 113.3 Bcf per day, recovering from an average of 112.1 Bcf per day seen in October. Liquefied Natural Gas (LNG) exports also brought a bit of relief to the demand side, rising to 18.5 Bcf per day from 17.9 Bcf per day in September.
Looking further down the road, the US Energy Information Administration (EIA) estimates dry gas production will hit 112.2 Bcf per day in 2026 and rise to 116.1 Bcf per day in 2027. Domestic use is projected at 92.4 Bcf per day in 2026 and 93.8 Bcf per day in 2027. Meanwhile, LNG export flows are likely to climb to 17.6 Bcf per day in 2026 and reach 18.6 Bcf per day in 2027. Even so, output is growing faster than overall demand, leaving the market in a very comfortable supply spot.
Because of this, Goldman Sachs cut its 2027 natural gas price target from $3.50 down to $2.80 per MMBtu. The bank pointed directly to heavy production coming out of the Permian basin and an expected daily surplus of more than 2 Bcf. In their view, the market will stay well supplied for now, and any real tightening in supplies might not happen until 2029. While higher LNG shipments help cushion the blow, rising drill volumes and mild weather keep pushing prices down.
Technical Chart Levels to Watch
From a technical standpoint, the market is seeing clear signs of long unwinding. Open interest slipped by 4.04% to settle at 56,538 contracts while prices fell by Rs 4.70, showing that buyers are packing up their positions and stepping aside.
Right now, natural gas is holding support around Rs 272. If it slides below that mark, prices could test Rs 267. On the flip side, the first major resistance sits at Rs 281. If the price can cross and stay above that hurdle, it might make a run toward Rs 285.
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Key Takeaways for Natural Gas Traders
- Mild Weather Delays Heating Season: Above-normal US temperatures through mid-November mean lower immediate heating demand.
- Storage Build Topped Estimates: An 80 Bcf weekly build pushed total reserves above five-year seasonal averages.
- Supply Overshadows Demand: Daily US production is back up over 113 Bcf, keeping a lid on any sustained rallies despite healthy LNG export volumes.
- Critical Price Levels: Watch Rs 272 on the downside and Rs 281 on the upside for the next directional break.