U.S. natgas futures edge off from six-week high

Wed Mar 6, 2013 9:30am EST
 
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* Front month hits six-week high on Tuesday
    * Cold weather still on tap in long-term outlooks
    * Nuclear outages running above normal

    By Eileen Houlihan
    NEW YORK, March 6 (Reuters) - U.S. natural gas futures edged
lower on Wednesday, slipping in some profit-taking after
climbing to a six-week high on Tuesday as cold weather blanketed
much of the nation.
    In addition, traders said still-bloated inventories were
adding more weight to the downside despite forecasts for more
cold next week and a high number of nuclear power plant outages.
    As of 9:23 a.m. EST (1423 GMT), front-month April natural
gas futures on the New York Mercantile Exchange were at
$3.512 per million British thermal units, down 1.7 cents, or
less than 1 percent.
    The nearby contract rose Tuesday to a six-week high of
$3.594.
    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.

    Forecaster MDA Weather Services called for normal or
below-normal readings across much of the country in its one to
five-day outlook.
    The latest National Weather Service six to 10-day forecast
issued on Tuesday called for below-normal temperatures for a
little more than the eastern half of the nation, with normal or
above-normal readings in the West.
    Nuclear outages totaled about 15,000 megawatts, or 15
percent of U.S. capacity, down from 15,300 MW out on Tuesday and
18,400 MW out a year-ago, but up from a five-year average outage
rate of about 13,700 MW. 
    
    ABOVE-AVERAGE STORAGE DRAW
    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 140 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. 
    
    OUTPUT COULD BE STARTING TO SLOW
    Baker Hughes data last week 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.
    Also the EIA said last week 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.