U.S. natgas futures hover near 18-month high on lingering cold
* Front month near $4 level, highest since September 2011 * Nuclear outages still running above normal * Cold weather on tap in long-term forecasts * Coming Up: Baker Hughes gas drilling rig data on Friday By Eileen Houlihan NEW YORK, March 22 (Reuters) - U.S. natural gas futures rose 1 percent early on Friday, boosted to just under Thursday's 18-month spot chart high as cold weather lingered in most of the United States. An extremely cold late winter, a string of supportive storage withdrawals and above-normal nuclear power plant outages have combined to lift nearby gas futures by about 28 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 was fueling the upside. But with winter weather expected to end soon, and this week's storage withdrawal coming in below expectations, some traders view the upside as limited. As of 9:19 a.m. EDT (1319 GMT), front-month April natural gas futures on the New York Mercantile Exchange were at $3.999 per mmBtu, up 6.4 cents, or more than 1 percent, after trading as high as $4.025 on Thursday, the highest mark for a spot contract since September 2011. Forecaster MDA Weather Services called for below, much-below or strong-below normal readings for nearly the entire country, except parts of the South, in its one to five-day outlook. The latest National Weather Service six to 10-day forecast issued on Thursday again called for below or much-below-normal temperatures for a more than the eastern half of the nation and along the West Coast, with some normal readings only in other parts of the West. Nuclear outages totaled 21,400 megawatts, or 21 percent of U.S. capacity, down from 22,600 MW out on Thursday, but up from 21,200 MW out a year ago and a five-year average outage rate of about 17,700 MW. INVENTORY DRAW FALLS SHORT OF EXPECTATIONS U.S. Energy Information Administration data on Thursday showed total domestic gas inventories fell last week by 62 billion cubic feet, below Reuters poll estimates for a 70 bcf draw. The EIA said reclassification of gas from base gas to working gas last week resulted in a 4 bcf increase in working gas stocks in Producing Region salt dome facilities. Most traders viewed the decline as bearish for prices, noting it was the first time in five weeks that the draw fell short of expectations. But some saw the report as supportive again, noting stocks were unchanged during the same week in 2012 and the five-year average decline for that week was 26 bcf. Domestic gas inventories are now at 1.876 trillion cubic feet, more than 21 percent below last year's record high levels for this time of year, but about 10 percent above the five-year average level. Stocks seem on track to end the heating season below 1.8 tcf, or just 3 percent above average. A Reuters poll in mid-January showed most analysts had expected stocks to finish winter at about 2 tcf. Early withdrawal estimates for next week's inventory report range from 59 bcf to 94 bcf versus a 45-bcf build during the same week last year and a five-year average increase for that week of 6 bcf. Traders were waiting for the next Baker Hughes gas drilling rig report to be released later Friday. Data last week showed the gas-directed 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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