UPDATE 3-Front US natgas futures hit 6-wk high, then close flat
* Aggregate inventories remain high, limit price gains * Nuclear outages still running above normal * Coming up: Reuters weekly natgas storage poll Wednesday By Joe Silha NEW YORK, March 5 (Reuters) - Front-month U.S. natural gas futures ended unchanged on Tuesday after trading higher for most of the session, pressured by profit-taking after a late run up to a six-week high. Fairly cold late-winter weather has helped push the front contract up about 12 percent in a little over two weeks. Last week's 5 percent gain was the biggest weekly run in six weeks. Technical traders noted the contract had broken some key trendline and moving average resistance on the way up, turning the chart picture slightly bullish. Front-month gas futures on the New York Mercantile Exchange ended unchanged at $3.529 per million British thermal units, after climbing late to a six-week high of $3.594. "The $3.50 level has been closely watched. We're now pushing above it, so there could be a bit of a break going on, but other indicators are not showing anything too bullish," said Matt Smith, commodity analyst at Schneider Electric in Kentucky. The nearby contract on Monday settled above $3.50 for the first time in six weeks, but technical traders agreed it must hold above that level to set up a test of next resistance at the 2013 high of $3.645 hit in late January. Some chart watchers remained skeptical of the bull move, while others said the market was due for a temporary pullback after the relative strength index climbed into overbought territory above 70 this week. Traders said strong draws from inventory, utilities using gas for power generation and significant outages at U.S. nuclear plants have also helped prop up prices. Plants burning gas usually make up much of the shut nuclear generation. But many traders see only limited potential for the upside in the near term, with winter winding down, storage still high and production flowing at or near a record peak. The National Weather Service six- to 10-day and eight- to 14-day forecasts on Monday showed mostly below-normal temperatures for the eastern half of the nation, but seasonal or above-normal readings were expected in the Northeast. ABOVE-AVERAGE STORAGE DRAW EXPECTED U.S. Energy Information Administration data last week showed domestic gas inventories for the week ended Feb. 22 fell 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, but traders noted storage is still relatively high at 308 bcf, or 16 percent, above that benchmark. Withdrawal estimates for Thursday's EIA report range from 120 bcf to 140 bcf, with most in the low-130s. Stocks fell by an adjusted 92 bcf in the same week in 2012, while the five-year average drop for that week is 107 bcf. Most analysts expect storage to end the heating season near 2 tcf, or 16 percent above average but 19 percent below last winter's record-high finish of 2.48 tcf. OUTPUT STARTS TO SLOW? Baker Hughes data on Friday showed the gas-directed drilling rig count fell last week for the fourth time in five weeks. The gas count is hovering just above the 13-1/2 year low of 413 hit in early November, but production remains high. EIA data on Thursday 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 temporarily froze wells. The EIA expects marketed gas production in 2013 to hit a record high for the third straight year.
© Thomson Reuters 2016 All rights reserved.