U.S. natgas futures edge higher for 4th session, hit 3-mth high
* Front month at highest mark since early December * Nuclear outages running above normal * Some milder weather on tap in long-term outlooks By Eileen Houlihan NEW YORK, March 12 (Reuters) - U.S. natural gas futures edged higher early on Tuesday, lifted in continued technical buying for a fourth straight session to the highest level of 2013 and the loftiest mark in just over three months. Although some milder weather is forecast for this week and next, recent cold weather pushed the nearby contract up nearly 17 percent since hitting a five-week low of $3.125 per million British thermal units in mid-February. The run up turned the chart picture more supportive and helped prices break through some key technical resistance points. As of 9:10 a.m. EDT (1310 GMT), front-month April natural gas futures on the New York Mercantile Exchange were at $3.674 per million British thermal units, up 2.5 cents, or less than 1 percent. The nearby contract rose as high as $3.676 in electronic trade, its highest price since early December, according to Reuters data. But with storage still high, production flowing at or near record levels and the milder weather outlooks, some traders said more upside could be difficult. Forecaster MDA Weather Services called for warm conditions in the western United States in its one to five-day outlook, with some below-normal temperatures lingering in the East. The latest National Weather Service six to 10-day forecast issued on Monday also called for below-normal temperatures in the West and above-normal for much of the East. Nuclear outages totaled about 16,500 megawatts, or 16 percent of U.S. capacity, down from 16,700 MW out on Monday and 19,500 MW out a year-ago, but up from a five-year average outage rate of about 15,500 MW. ANOTHER ABOVE-AVERAGE STORAGE DRAW U.S. Energy Information Administration data last week showed domestic gas inventories fell the prior week by 146 billion cubic feet to 2.083 trillion cubic feet. Most traders viewed the decline as bullish for prices, noting it was the third straight week that the draw came in above expectations. A Reuters poll showed traders and analysts had forecast a 134 bcf drop. The draw was also well above the 92 bcf pull seen during the same week last year and the five-year average drop of 107 bcf for that week. Storage is now 361 bcf, or 15 percent, below last year's record highs for this time of year, but it is also 269 bcf, or 15 percent, above the five-year average level. Early withdrawal estimates for this week's inventory report range from 88 bcf to 147 bcf, well above the 66 bcf pulled from storage during the same week in 2012 and the five-year average decline of 74 bcf for that week. A string of strong weekly withdrawals has prompted analysts to sharply lower estimates for end-winter storage, with some expecting inventories to drop to as low as 1.8 tcf, or about 4 percent above average. A Reuters poll in mid-January showed most analysts had expected stocks to finish the heating season at about 2 tcf. So far this winter, nearly 500 bcf more gas has been pulled from storage than last year. RIGS DECLINE; OUTPUT SLOWING LITTLE Baker Hughes data on Friday showed the gas-directed drilling rig count fell 13 to a nearly 14-year low of 407. It was the fifth drop in six weeks, but production has not slowed much, if at all, from the record high posted last year. The EIA expects marketed gas production in 2013 to hit a record high for the third straight year.
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