UPDATE 3-US natgas futures end near flat despite bearish EIA data
* Storage draw falls short of estimates, 1st time in 5 weeks * Outlook turns slightly colder but milder temps still ahead * Coming Up: Baker Hughes rig data, CFTC trade data Friday By Joe Silha NEW YORK, Jan 31 (Reuters) - Front U.S. natural gas futures ended near unchanged on Thursday in seesaw trade as fairly cold Northeast and Midwest weather forecasts for the next five days countered some early selling after a slightly bearish weekly inventory report. Data from the U.S. Energy Information Administration showed that total domestic gas inventories fell last week by 194 billion cubic feet to 2.802 trillion cubic feet. Most traders viewed the decline as slightly bearish, noting it came in below the Reuters poll estimate of 206 bcf and fell short of market expectations for the first time in five weeks. "The lower-than-anticipated storage withdrawal fueled yet another selloff ... but forecast uncertainty has led to wild swings in natural gas prices this week," BNP analyst Teri Viswanath said in a report. Some traders saw the draw as slightly supportive, noting it easily topped the 149 bcf decline seen during the same week last year and the five-year average drop for that week of 178 bcf. Front gas futures on the New York Mercantile Exchange ended up 0.4 cent at $3.339 per million British thermal units after posting an intraday low of $3.243 after the EIA report. The nearby contract, which hit a 6-1/2 week high of $3.645 early last week, has gained 3.5 percent in the last two sessions following a 9.5 percent slide in six sessions through Tuesday. That selloff helped turn the technicals bearish, but some chart watchers said the market was oversold and due for a bounce. Some fundamental traders also noted that gas prices at current levels were again competitive with coal and should draw more utility interest for power generation. But many traders remain skeptical of any upside in prices unless the cold is sustained, with inventories still relatively high and production flowing at or near a record pace. MDA Weather Services on Thursday said there were some minor colder tweaks made today in the six-to-10-day outlook, but the private forecaster still expects progressive warming through the central & eastern U.S. during that period. STORAGE DRAW FALLS SHORT OF EXPECTATIONS The weekly inventory draw again widened the deficit relative to last year by 45 bcf to 202 bcf, or 7 percent below last year's record highs for that time, a supportive trend. But while it also trimmed 16 bcf from the overhang versus the five-year average, traders noted that storage is still relatively high at 304 bcf, or 12 percent, above that benchmark. Early withdrawal estimates for next week's inventory report range from 140 bcf to 173 bcf. That would be well above the 94 bcf pulled from storage during the same week in 2012 but in line with the five-year average decline for that week of 165 bcf. If drawdowns for the rest of winter match the five-year average pace, inventories will end March at 2.032 tcf, about 18 percent above normal but 18 percent below last year, when stocks finished a very mild heating season at a record high 2.48 tcf. PRODUCTION STILL AT, NEAR RECORD HIGHS EIA data on Thursday also showed that November gross natural gas production in the lower 48 U.S. states climbed to a record high 73.88 bcf per day, the third straight monthly record. Output is still running about 1.42 bcf per day, or 2 percent, above the same year-ago month. Baker Hughes will issue its next drilling rig report on Friday. While the company's gas-directed rig count is hovering not far above a 13-1/2 year low hit nearly three months ago, production has shown no significant signs of slowing. The EIA estimates that marketed gas output in 2013 will hit a record high for the third straight year.
© Thomson Reuters 2017 All rights reserved.