U.S. natgas futures edge higher early amid more cold

Tue Mar 5, 2013 9:29am EST
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* Front month hits more than five-week high
    * Cold weather on tap in long-term outlooks
    * Nuclear outages still running above normal

    By Eileen Houlihan
    NEW YORK, March 5 (Reuters) - U.S. natural gas futures edged
higher for a second straight day on Tuesday, lifted to a near
six-week high by forecasts for continued cold weather for most
of the nation despite bloated inventories.
    As of 9:22 a.m. EST (1422 GMT), front-month April natural
gas futures on the New York Mercantile Exchange were at
$3.572 per million British thermal units, up 4.3 cents, or more
than 1 percent, after climbing more than 2 percent on Monday to
    It was the first front-month close above $3.50 in six weeks,
and could set the stage for more upside, but most technical
traders would like to see a close above the 2013 high of $3.645
posted in late January to turn more bullish.
    Forecaster MDA Weather Services called for normal or
below-normal readings across the country in its one to five-day
outlook, with much of the cold concentrated in the South and the
    The latest National Weather Service six to 10-day forecast
issued on Monday called for below-normal temperatures for the
mid-Continent and normal or above-normal readings on both
    Nuclear outages totaled about 15,300 megawatts, or 15
percent of U.S. capacity, down slightly from 15,800 MW on Monday
and 19,300 MW a year-ago, but up from a five-year average outage
rate of about 13,500 MW. 
    U.S. Energy Information Administration data last week 
showed domestic gas inventories fell the prior week by 171
billion cubic feet to 2.229 trillion cubic feet. 
    The weekly draw came in well above the five-year average
drop for that week and storage is now 12 percent below last
year's record high levels, but it is also 16 percent above the
five-year average level.

    Withdrawal estimates for this week's storage report range
from 120 bcf to 160 bcf versus a 92 bcf draw in the same week in
2012 and a five-year average drop for that week of 107 bcf.
    Most analysts expect storage to end the heating season at
about 2 tcf, or 16 percent above average, but 19 percent below
last winter's record-high finish of 2.48 tcf. 
    Baker Hughes data on Friday showed the gas-directed
drilling rig count fell for the fourth time in five weeks,
dropping by eight to 420. 

    The gas drilling rig count is hovering just above the
13-1/2-year low of 413 hit in early November, but production is
still high.
    EIA data last week showed that gross natural gas output in
December slipped slightly from November's record high, the first
time in four months that production failed to set a new peak. 
    But most analysts pegged the decline to cold weather in the
Southwest that likely froze wells and not producers
intentionally curbing dry gas flows.
    The EIA expects marketed gas production in 2013 to hit a
record high for the third straight year.