U.S. natgas futures edge lower for fourth day on milder weather

Wed Apr 3, 2013 9:16am EDT
 
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* Front month well below last week's 19-month spot high
    * Above-normal temperatures on tap for eastern U.S.
    * Nuclear outages remain slightly above normal
    * Coming Up: EIA natgas storage data Thursday

    By Eileen Houlihan
    NEW YORK, April 3 (Reuters) - U.S. natural gas futures edged
lower for a fourth straight session on Wednesday, as milder
weather on tap for consuming regions of the nation late this
week and next was expected to curb heating demand.
    Late-winter cold put a huge dent in inventories and drove
gas prices up nearly 30 percent since mid-February, but with
winter-like weather expected to wind down soon, most traders
expect more upside to be limited.
    But some traders said above-normal nuclear power plant
outages could continue to support near-term demand for gas-fired
generation.
    As of 9:07 a.m. EDT (1307 GMT), front-month May natural gas
futures on the New York Mercantile Exchange were at
$3.937 per million British thermal units, down 3.2 cents, or
less than 1 percent, after rising to $4.121 last week, the
highest level for a nearby contact since September 2011.
    Despite some lingering cold this week in consuming regions
in the Northeast and Midwest, the latest National Weather
Service six to 10-day forecast issued on Tuesday again called
for above-normal readings for about the eastern half of the
nation, with some below-normal readings only expected in parts
of the Southwest.
    Nuclear outages totaled 22,400 megawatts, or 22 percent of
capacity, down from 23,400 MW out on Tuesday and 22,600 MW out a
year ago, but up from a five-year average outage rate of 21,600
MW. 
    
    INVENTORY DRAW WELL ABOVE EXPECTATIONS
    Last week's gas storage report from the U.S. Energy
Information Administration showed domestic gas inventories fell 
the prior week by 95 billion cubic feet, above Reuters poll
estimates for an 87 bcf draw. 
    It was the fifth time in six weeks that the weekly
withdrawal was above expectations.
    Domestic gas inventories are now at 1.781 trillion cubic
feet, nearly 27 percent below last year's record high, but still
nearly 4 percent above the five-year average.

    Early estimates for Thursday's EIA gas storage report range
from 65 bcf to 108 bcf, with most in the high-80s bcf. Stocks
rose an adjusted 43 bcf during the same week last year and on
average over the past five years have gained 4 bcf that week.
    Stocks began the winter at a record 3.929 tcf, but about
2.15 tcf of gas has been pulled from storage so far this heating
season, or 45 percent more than last year at this time.
    Storage will likely end the heating season near the 1.73 tcf
average, or 30 percent below last winter's record-high finish of
2.48 tcf. A Reuters poll in mid-January showed most analysts
expected stocks to finish the winter at about 2 tcf.
    EIA data released Friday showed that gross natural gas
production in January fell nearly 1 percent from December
levels, the second straight monthly decline.
    Output also dropped below year-ago levels for the first time
in years, but it is still unclear whether recent monthly
declines were due to well freeze-offs from the cold or
producers' curbing dry gas flows because prices were not that
attractive.
    Baker Hughes data last week showed the gas-directed
drilling rig count fell by 29 to a 14-year low of 389.