U.S. natgas futures at 20-month high on tighter inventories
* Front month at highest mark since August 2011 * Above-normal temperatures on tap for South * Below-normal readings seen for most northern states By Eileen Houlihan NEW YORK, April 8 (Reuters) - U.S. natural gas futures rose about 1 percent early on Monday, extending gains for a third straight session and reaching their highest level since August 2011. Traders said a tightening inventory picture and high levels of offline nuclear power plants helped traders ignore moderating weather forecasts that should curb demand for heating and delay any early cooling demand. Government storage data last week showed inventories fell below the five-year average for the first time since September 2011, a supportive sign, particularly with another draw expected this week. Cold late-winter weather, above-average nuclear power plant outages and stronger price expectations have helped drive gas futures up about 34 percent since mid-February. Most traders had expected milder spring temperatures to limit any additional upside, but with a chilly start to April at least one more storage withdrawal is expected before the inventory injection season begins. As of 9:11 a.m. EDT (1311 GMT), front-month May natural gas futures on the New York Mercantile Exchange were up 3 cents, or less than 1 percent, at $4.155 per million British thermal units after rising as high as $4.18 in electronic trade, the highest mark for a nearby contact since August 2011. Forecaster MDA Weather Services called for stronger warmth in the East in its one-to-five-day outlook, with below- or much-below-normal temperatures across the midcontinent. The National Weather Service's latest six-to-10-day forecast issued on Sunday called for above-normal readings across southern states and below-normal readings across most northern states. Nuclear outages totaled 22,900 megawatts, or 23 percent of capacity, up from 20,700 MW out on Friday, but down from 23,400 MW a year ago and a five-year average outage rate of 23,000 MW. INVENTORY DRAW ABOVE EXPECTATIONS AGAIN Last week's report from the U.S. Energy Information Administration showed domestic gas inventories fell the prior week by 94 billion cubic feet to 1.687 trillion cubic feet. Most traders viewed the decline as supportive for prices, noting that stocks usually build slightly that week and that the draw came in above Reuters poll estimates of 91 bcf. It was the sixth time in seven weeks that the weekly withdrawal was above expectations. Domestic gas inventories of 1.687 tcf are nearly 32 percent below last year's record high and more than 2 percent below the five-year average. Early withdrawal estimates for this week's storage report range from 10 bcf to 46 bcf, compared with an 11-bcf build during the same week last year and a five-year average rise of 15 bcf for that week. Stocks look likely to end the heating season near 1.66 tcf, about 33 percent below last winter's record-high finish of 2.48 tcf and 4 percent below average. Baker Hughes data on Friday showed the gas-directed drilling rig count fell by 14 last week to a 14-year low of 375.
© Thomson Reuters 2016 All rights reserved.