UPDATE 3-Storage draws, cold lift U.S. natgas futures for 3rd day
* Front month hits highest mark since late November * Nuclear outages still running above normal * Cold weather back on tap on longer-term outlooks By Eileen Houlihan NEW YORK, March 15 (Reuters) - U.S. natural gas futures rose nearly 2 percent on Friday, lifted for a third straight session to a 3-1/2-month spot chart high as a string of supportive storage reports and forecasts for more cold weather in consuming regions lent support. Above-average nuclear power plant outages and recent talk of increased natural gas exports to Mexico also helped keep momentum to the upside, traders said. Most agreed the chart picture remained supportive, after the nearby contract broke through several key resistance levels on its 24-percent run up in the last month. But some cautioned that the impending end of winter could provide resistance to higher prices. "The natural gas market extended recent gains with apparent ease as the temperature outlook trended cooler again. As we've been noting, however, the market is in full weather-driven mode here and is only as strong as the underlying forecast, and will see a downside test once the weather pattern changes," said Citi Futures energy specialist Tim Evans. Front-month April natural gas futures on the New York Mercantile Exchange rose 6 cents, or 1.6 percent, to settle at $3.872 per million British thermal units. The contract rose as high as $3.924, the highest mark for a spot contract since late November, according to Reuters data. It is up 7 percent this week, and 24-percent from the five-week low of $3.125 touched in mid-February. In the cash market, gas for weekend delivery at the NYMEX benchmark Henry Hub in Louisiana rose 15 cents to $3.89, its highest average in 17 months. Late deals eased slightly to 7 cents over the front month, compared with an 11-cent premium for deals done late Thursday. Gas on the Transco pipeline at the New York citygate gained 9 cents to $4.09. Forecaster MDA Weather Services called for cold weather in northern-tier states in its one to five-day outlook. The latest National Weather Service six to 10-day forecast issued on Thursday called for below-normal temperatures for much of the United States, with above-normal readings in the Southeast stretching into south Texas. Nuclear outages totaled 18,300 megawatts, or 18 percent of U.S. capacity, up from 17,400 MW out on Thursday and a five-year average outage rate of about 16,700 MW, but down from 19,600 MW out a year ago. ANOTHER ABOVE-AVERAGE STORAGE DRAW U.S. Energy Information Administration data on Thursday showed storage fell 145 billion cubic feet last week, above Reuters poll expectations for a 134 bcf draw, the year-ago drop of 66 bcf, and the five-year average decline for that week of 74 bcf. It was the fourth straight larger-than-expected drawdown from inventories. The data showed domestic gas inventories are now at 1.938 trillion cubic feet, nearly 19 percent below last year's record high levels for this time of year, but about 11 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 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. Early withdrawal estimates for next week's EIA storage report range from 48 bcf to 73 bcf, versus a flat year-ago week and a five-year average withdrawal of 26 bcf for that week. Baker Hughes data on Friday showed the gas-directed drilling rig count rose by 24 this week, the largest number in over three years, lifted from last week's 14-year low to 431. But 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. The EIA this week also said natural gas exports to Mexico hit a record high last year and will grow more in coming years.
© Thomson Reuters 2017 All rights reserved.