U.S. natgas futures edge higher, hit 3-month spot chart high

Wed Mar 13, 2013 9:45am EDT
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* Front month at highest mark since early December
    * Nuclear outages still running above normal
    * Mixed weather outlooks, some mild temperatures on tap
    * Coming Up: EIA natgas storage data on Thursday

    By Eileen Houlihan
    NEW YORK, March 13 (Reuters) - U.S. natural gas futures
edged higher early on Wednesday, climbing to a fresh three-month
spot chart high amid continued technical buying and some cold
weather expected to return to consuming regions of the nation
late this week.
    With forecasts for next week mixed, calling for some
above-normal and below-normal temperatures, and inventories
still well above normal, some traders remained cautious of more
    But others said the chart picture remained supportive, with
the nearby contract breaking through some key resistance levels
on its 18 percent run up from the five-week low of $3.125 per
million British thermal units hit in mid-February.
    As of 9:22 a.m. EDT (1322 GMT), front-month April natural
gas futures on the New York Mercantile Exchange were at
$3.679 per million British thermal units, up 3.4 cents, or about
1 percent.
    The nearby contract rose as high as $3.686 in electronic
trade, its highest price since early December, according to
Reuters data.
    Forecaster MDA Weather Services called for warmth to build
in the western United States in its one to five-day outlook, but
some below-normal temperatures were seen lingering in the East.
    The latest National Weather Service six to 10-day forecast
issued on Tuesday also called for below-normal temperatures in
most of the West and normal or above-normal for much of the
    Nuclear outages totaled about 17,400 megawatts, or 17
percent of U.S. capacity, up from 16,500 MW out on Tuesday and a
five-year average outage rate of about 15,900 MW, but down from
19,600 MW out a year ago. 
    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 supportive, 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 Thursday's EIA inventory
report range from 115 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.
    Baker Hughes data last week 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.