Profit taking pressures US natgas futures ahead of EIA stocks data

Thu Feb 7, 2013 9:33am EST
 
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NEW YORK, Feb 7 (Reuters) - Front-month U.S. natural gas
futures reversed course and headed lower early Thursday,
pressured by profit taking after three straight days of gains
and ahead of what should be a bearish weekly inventory report
later this morning.
    But despite the modest pullback, traders expect only limited
downside with heating demand expected to pick up when another
shot of cold moves into the Midwest late next week and then
spreads east, blanketing much of the nation.
    "Weather forecasts indicating below-normal temperatures and
increased heating needs during the second half of this month
continue to provide a boost to the market," Addison Armstrong at
Tradition Energy said in a report.
    At 9:15 a.m. EST (1415 GMT), front-month gas futures 
on the New York Mercantile Exchange were down 0.9 cent at $3.409
per million British thermal units after trading between $3.403
and $3.453. The nearby contract, which hit a 6-1/2-week high of
$3.645 two weeks ago, had gained 3.5 percent in the previous
three sessions following a 4.2 percent slide last week.    
    Gas prices have tried to rally this week since last week's
low in the $3.20 area, but traders noted that the move up has
been difficult, with inventories still relatively high,
production flowing at or near a record peak and another brief
warm up expected next week that should again slow demand.
    "The 6-10 day (forecast) continues to transition cooler. By
the 11-15 day, the American and European ensembles agree on
widespread, nearly coast-to-coast cold," private forecaster
Commodity Weather Group said in its morning report.
    Chart traders said the technicals turned neutral this week
as the front month contract broke minor resistance at the 40-day
and 100-day moving averages on the way up, but most agreed it
would take a close above the $3.645 high from two weeks ago to
turn the trend bullish.
  
    BELOW AVERAGE STORAGE DRAW EXPECTED 
    The U.S. Energy
    If drawdowns for the rest of winter match the five-year
average, inventories will end March at 2.032 tcf, about 18
percent above normal, but 18 percent below last year, when
stocks finished a mild heating season at a record-high 2.48 tcf.