U.S. natgas futures lower in profit taking from 17-mth high
* Front month hits highest level since October 2011 * Nuclear outages still running above normal * Cold weather remains on tap in long-term outlooks By Eileen Houlihan NEW YORK, March 20 (Reuters) - U.S. natural gas futures edged lower early on Wednesday, down for the first time in six sessions in some profit taking after the nearby contract rose to a 17-month spot chart high. Lingering cold weather in consuming regions of the United States, a string of supportive weekly storage withdrawals and above-normal nuclear power plant outages have combined to lift nearby gas futures up 27 percent in just over a month. The contract broke through several key resistance levels on its run up from a five-week low of $3.125 per million British thermal units hit in mid-February, and was accompanied by steady gains in open interest, a bullish sign indicating that new buying and not short covering has been fueling the upside. But some chart traders said the contract was overbought and due for a pullback with winter winding down and the 14-day relative strength index climbing into the high-80s this week, its highest in several years according to Reuters data. As of 9:30 a.m. EDT (1330 GMT), front-month April natural gas futures on the New York Mercantile Exchange were at $3.923 per mmBtu, down 4.6 cents, or about 1 percent, after trading as high as $3.976, the highest mark for a spot contract since late October 2011. Forecaster MDA Weather Services called for below, much-below or strong-below normal readings for nearly the entire nation except the South in its one to five-day outlook. The latest National Weather Service six to 10-day forecast issued on Tuesday again called for below or much-below-normal temperatures for a little more than the eastern half of the nation and along the West Coast, with some normal readings in other parts of the West. Nuclear outages totaled 21,700 megawatts, or 22 percent of U.S. capacity, up from 21,000 MW out on Tuesday, 20,900 MW out a year ago and a five-year average outage rate of about 17,100 MW. ANOTHER ABOVE-AVERAGE STORAGE DRAW U.S. Energy Information Administration data last week showed storage fell 145 billion cubic feet the prior week, more than 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. The 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 this week's EIA storage report range from 61 bcf to 74 bcf, versus a flat year-ago week and a five-year average withdrawal of 26 bcf for that week. Baker Hughes data last week showed the gas-directed drilling rig count rose by 24, the largest number in over three years, lifted from the prior week's 14-year low to 431. But while the EIA last week lowered its growth forecast for 2013, it still expects marketed gas production to hit a record high for the third straight year.
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