U.S. natgas futures hit 3-month spot high ahead of EIA data

Thu Mar 14, 2013 9:29am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Front month at highest mark since early December
    * Nuclear outages still running above normal
    * Mixed weather outlooks, some cold weather back on tap
    * Coming Up: EIA natgas storage data on Thursday

    By Eileen Houlihan
    NEW YORK, March 14 (Reuters) - U.S. natural gas futures rose
to a more than three-month spot chart high early Thursday,
lifted by continued technical buying, cold weather set to return
to consuming regions late this week and next and expectations
for another big weekly storage draw.
    Most traders and analysts expect weekly storage data from
the U.S. Energy Information Administration to show a drop of
about 134 billion cubic feet when it is released at 10:30 a.m.
EDT (1430 GMT), a Reuters poll showed. 
    Storage fell an adjusted 66 bcf during the same week in 2012
and the five-year average decline for that week is 74 bcf.
    Many agree the chart picture remains supportive, after the
nearby contract broke through some key resistance levels on its
18-percent run up from a five-week low of $3.125 per million
British thermal units hit in mid-February.
    As of 9:18 a.m. EDT (1318 GMT), front-month April natural
gas futures on the New York Mercantile Exchange were at
$3.713 per million British thermal units, up 3.3 cents, or about
1 percent.
    The front-month rose as high as $3.715 in electronic trade,
the highest mark for a spot contract 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
colder weather in northern regions, including the Northeast.
    The latest National Weather Service six to 10-day forecast
issued on Wednesday called for below-normal temperatures for
much of the nation, with above-normal readings in the Southeast
stretching into Texas.
    Nuclear outages totaled about 17,400 megawatts, or 17
percent of U.S. capacity, flat to Wednesday's levels, up from a
five-year average outage rate of 16,300 MW, but down from 19,600
MW out a year ago. 
    Last week's EIA data showed domestic gas inventories fell
the prior week by 146 bcf 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.

    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.
    Traders were waiting for the next Baker Hughes gas
drilling rig report to be released on Friday. Data last week
showed the gas-directed 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.