UPDATE 3-U.S. natgas futures end lower after hitting 3-month high
* Front month hits 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 ended lower on Tuesday, pressured by some profit-taking after technical buying boosted the front contract to its loftiest mark in just over three months. Traders said some milder weather forecast for this week and next, still high storage and near-record production also weighed on prices after three straight gains. Recent coldness had pushed the nearby contract up about 17 percent from the five-week low of $3.125 per million British thermal units hit in mid-February. The run up turned the chart picture more supportive and helped prices break through some key technical resistance. But front-month April natural gas futures on the New York Mercantile Exchange closed lower Tuesday, losing 0.4 cent to finish at $3.645 per mmBtu. The nearby contract rose as high as $3.676 in electronic trade, its highest price since early December, according to Reuters data. Other months ended slightly lower as well, with the May contract down 0.5 cent at $3.684 and summer months losing about 1 cent each. In the cash market, gas for Wednesday delivery at the NYMEX benchmark Henry Hub in Louisiana rose 7 cents to $3.71, its highest level since late November. Late deals firmed to 7 cents over the front month, from deals done late Monday at a 5-cent premium. Gas on the Transco pipeline at the New York citygate gained 12 cents to $4. 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 in which 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. 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 lower estimates sharply 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. While the EIA on Tuesday lowered its growth forecast for 2013, it still expects marketed gas production to hit a record high for the third straight year.
© Thomson Reuters 2017 All rights reserved.