U.S. natgas futures edge higher ahead of contract expiry
* Front month remains under last week's 18-month high * Nuclear outages still running above normal * Some cold weather on tap in long-term forecasts By Eileen Houlihan NEW YORK, March 26 (Reuters) - U.S. natural gas futures edged higher early on Tuesday, but remained under last week's 18-month spot chart high ahead of the front month's expiration later in the day. Cold late-winter weather helped drive a string of supportive storage withdrawals, pushing gas futures up about 25 percent in the past five weeks. Above-normal nuclear power plant outages have also increased demand for gas-fired replacement power and underpinned price gains. The nearby 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. But technical traders said the front contract was due for a pullback ahead of Tuesday's expiration and with winter winding down. The contract failed to close above the $4 level after poking through it last week. As of 9:19 a.m. EDT (1319 GMT), front-month April natural gas futures on the New York Mercantile Exchange were at $3.891, up 2 cents, or less than 1 percent, after rising to $4.025 last week, the highest mark for a spot contract since September 2011. Forecaster MDA Weather Services called for below or much-below-normal temperatures for about the eastern half of the country in its one to five-day outlook, with the cold concentrated in the Southeast. The National Weather Service's latest six to 10-day forecast issued on Monday called for below-normal readings in the Midwest and Northeast and some above-normal readings in the West and South Texas, with near-normal temperatures on tap for the Southeast. Nuclear outages totaled 21,900 megawatts, or 22 percent of U.S. capacity, down from 22,500 MW out on Monday, but up from 21,600 MW out a year ago and a five-year average outage rate of about 18,400 MW. INVENTORY DRAW FALLS SHORT OF EXPECTATIONS Last week's data from the U.S. Energy Information Administration showed total domestic gas inventories fell the prior week by 62 billion cubic feet, below Reuters poll estimates for a 70 bcf draw. It was the first time in five weeks that the weekly draw fell short of expectations. Domestic gas inventories are now at 1.876 trillion cubic feet, more than 21 percent below last year's record high for this time of year, but about 10 percent above the five-year average. 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 the winter at about 2 tcf. Early withdrawal estimates for this week's inventory report range from 59 bcf to 103 bcf versus, a 45-bcf build during the same week last year and a five-year average increase for that week of 6 bcf. Baker Hughes data on Friday showed the gas-directed drilling rig count fell by 13 to 418, hovering just above the recent 14-year low of 407 posted three weeks ago. While the EIA recently 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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