U.S. natgas futures edge higher ahead of weekly storage data
* Front month well above recent 3-month spot low * Above-normal nuclear outages, near-term cold support * Record production could limit more gains * Coming up: EIA natgas storage data Thursday By Eileen Houlihan NEW YORK, Jan 24 (Reuters) - U.S. natural gas futures edged higher early on Thursday after two straight losses, lifted by expectations for another large inventory drawdown and continued cold in the eastern half of the country. Traders and analysts expect weekly data from the U.S. Energy Information Administration to show a draw of about 167 billion cubic feet when it is released at 10:30 a.m. EST (1530 GMT), a Reuters poll showed. Stocks fell by 162 bcf in the same week last year, while the five-year average decline for that week is 176 bcf. Most traders remained cautious ahead of the data, after declines have exceeded industry expectations for the past three weeks. Many said it reflects what could be some permanent underlying growth in demand this year as utilities switch from coal to cheaper gas for power generation. As of 9:20 a.m. EST (1420 GMT), front-month February natural gas futures on the New York Mercantile Exchange were at $3.57 per million British thermal units, up 1.6 cents, or less than 1 percent. The front-month contract rose to a more than six-week high of $3.645 on Tuesday, after falling in early January to $3.05, a contract low and the lowest mark for a spot contract since late September. Forecaster MDA Weather Services called for continued below-normal temperatures for much of the East in its one- to five-day forecast, switching to above-normal readings in the six- to 10-day outlook for the eastern United States and some below in the West. The latest National Weather Service six- to 10-day forecast issued on Wednesday showed normal temperatures for most of the country, with above-normal readings across the South and below-normal in the Midwest. Nuclear outages totaled 9,200 megawatts, or 9 percent of U.S. capacity, down from 10,200 MW out on Wednesday, but up from 8,800 MW out a year ago and a five-year average outage rate of about 7,000 MW. ANOTHER BIG STORAGE DRAW, BUT STOCKS ABOVE AVERAGE Last week's EIA gas storage report showed inventories fell the prior week by 148 bcf, above industry expectations for a 136-bcf draw. But despite recent large withdrawals, storage remains at 3.168 trillion cubic feet, about 4 percent below year-earlier levels, but more than 11 percent above the five-year average. Inventories started the heating season in early November at 3.929 tcf, the fourth straight year in which they have headed into the heating season at a record peak. DRILLING RIG COUNT SLIDES, BUT OUTPUT NEAR RECORD Baker Hughes data last week showed the gas-directed rig count had fallen by five to 429, its second straight weekly loss. Drilling for natural gas has mostly declined for more than a year, with gas rigs down 54 percent since peaking at 936 in October 2011. But the EIA also said recently that it expected gas output in 2013 to rise to 69.84 bcf per day, the third straight annual record.
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