US natgas futures slip for 6th straight day ahead of expiration
* Front month contract to expire later Tuesday * Contract remains above recent three-month spot chart low * Above-normal nuclear outages lend support By Eileen Houlihan NEW YORK, Jan 29 (Reuters) - U.S. natural gas futures slid early Tuesday, extending losses for a sixth straight session, as mild weather this week in the Northeast and Midwest slowed heating demand ahead of the February contract's expiration. But with cooler weather expected to return to the East next week, and nuclear outages still above normal, traders remained cautious about more downside for other nearby contracts. As of 9:21 a.m. EST (1421 GMT), front-month February natural gas futures on the New York Mercantile Exchange, which expire later Tuesday, were at $3.233 per million British thermal units, down 5.6 cents, or nearly 2 percent. The front month hit a 6-1/2-week high of $3.645 early last week but have fallen 7.8 percent in the last five sessions, the biggest five-day slide in nearly seven weeks. The contract fell 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 above-normal temperatures for most of the eastern half of the nation in its one- to five-day forecast, and normal, above-normal or far-above-normal readings in its six- to 10-day outlook. The latest National Weather Service six- to 10-day forecast, issued on Monday, showed above-normal readings from the mid-Continent west, but normal or below-normal readings in the eastern third of the country. Nuclear outages totaled 7,700 megawatts, or 8 percent of U.S. capacity, down from 10,200 MW a year ago but up from a five-year average outage rate of about 6,600 MW. BIG STORAGE DRAWS FAIL TO FIRM PRICES Last week's gas storage report from the U.S. Energy Information Administration showed domestic gas inventories fell in the prior week by 172 billion cubic feet, above industry expectations for a 167 bcf draw. Most traders viewed the decline as supportive, noting it was the fourth straight week that declines topped industry expectations. Traders said the recent larger-than-expected inventory draws could be reflecting new growth in gas use this year as utilities switch from coal to cheaper gas for power generation. But despite the large withdrawals, storage remains at 2.996 trillion cubic feet, about 5 percent below year-earlier levels, but 12 percent above the five-year average. Early withdrawal estimates for this week's inventory report range from 197 bcf to 210 bcf, well above the 149 bcf drawn from inventory during the same week last year and the five-year average decline of 178 bcf for that week. If drawdowns for the rest of the winter match the five-year average, inventories will end March at 2.048 tcf, about 18 percent above normal but 17 percent below last year, when stocks finished a very mild heating season at a record-high 2.48 tcf. GAS RIG COUNT GAINS, FIRST TIME IN THREE WEEKS Baker Hughes data on Friday showed the gas-directed drilling rig count gained last week for the first time in three weeks, rising by five to 434. Drilling for natural gas has mostly been in decline for more than a year, with the rig count not far above the 13-1/2-year low of 413 posted in early November. But so far production has shown no significant sign of slowing. The EIA estimates that gas output in 2013 will hit a record high for the third straight year.
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