UPDATE 3-Storage draws, cold lift U.S. natgas futures for 3rd day

Fri Mar 15, 2013 3:03pm EDT
 
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* 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.