U.S. natgas futures rise early ahead of more cold weather
* Front month remains above recent 3-month low * Colder weather set to return late-week, next week * Nuclear outages running well above normal levels * Coming Up: EIA natgas storage data Thursday By Eileen Houlihan NEW YORK, Feb 13 (Reuters) - U.S. natural gas futures edged higher early on Wednesday, with prospects for increased heating demand from cold weather forecast to move back into consuming regions of the nation late this week and next. In addition, above-normal nuclear power plant outages and expectations for a large weekly inventory draw on Thursday were keeping momentum to the upside, despite still bloated storage and record high production. As of 9:23 a.m. EST (1423 GMT), front-month March natural gas futures on the New York Mercantile Exchange were at $3.263 per million British thermal units, up 3.3 cents, or just over 1 percent. The front month contract hit a 6-1/2 week high of $3.645 in late January after touching more than a three-month low of $3.05 in early January. Forecaster MDA Weather Services called for warm conditions early but cold weather late in the Midwest in its one to five-day outlook. In its six to 10-day forecast, as well as the latest National Weather Service six to 10-day forecast issued on Tuesday, both called for normal or below-normal temperatures for most of the nation. Nuclear outages totaled 13,200 megawatts, or 13 percent of U.S. capacity, up from 13,100 MW out on Tuesday, 10,900 MW out a year ago and a five-year average outage rate of about 8,400 MW. ANOTHER BELOW AVERAGE STORAGE DRAW Last week's gas storage report from the U.S. Energy Information Administration showed total domestic inventories fell the prior week by 118 billion cubic feet to 2.684 trillion cubic feet. Most traders viewed the report as bearish, noting the draw came in well below Reuters poll estimates for a 132 bcf drop. While stocks are now 8 percent below last year's record levels, they are 15 percent above the five-year average level for this time of year. Withdrawal estimates for Thursday's weekly inventory report so far range from 130 bcf to 180 bcf versus a year-ago drop of 113 bcf and a five-year average decline for that week of 154 bcf. If withdrawals for the rest of winter match the five-year average, stocks will end March at 2.079 tcf, about 20 percent above normal, but 16 percent below last year, when inventories finished a very mild heating season at a record high 2.48 tcf. DRILLING DECLINES, PRODUCTION FAILS TO SLOW Baker Hughes data last week showed the gas-directed drilling rig count fell for the fourth time in five weeks, dropping by three to 425. But while the gas rig count is hovering not far above the 13-1/2-year low of 413 hit three months ago, production has shown no significant sign of slowing. Producers have curbed dry gas drilling but the associated gas produced by more profitable liquids-rich wells has kept gas flowing at or near a record pace.
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