U.S. natgas futures edge off of 21-month spot chart high

Fri Apr 19, 2013 9:37am EDT
 
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* Front month hit highest mark since July 2011 on Thursday
    * Below-normal temperatures remain on tap for consuming
regions
    * Nuclear power plant outages above year ago, five-year norm
    * Coming Up: Baker Hughes gas drilling rig data Friday

    By Eileen Houlihan
    NEW YORK, April 19 (Reuters) - U.S. natural gas futures
edged lower early on Friday, as traders blamed profit-taking
from Thursday's 21-month spot chart high.
    Still chilly weather in consuming regions of the nation and
ongoing spring power plant outages were expected to keep demand
for gas-fired generation firm.
    In addition, the season's first storage injection reported
on Thursday came in below expectations, and lingering cold
weather this month is expected to slow inventory builds and
drive stocks further into deficit, fueling concerns over a
tighter supply picture this year.
    Gas futures are up about 41 percent since mid-February,
after cold and lingering winter weather put a huge dent in
inventories.
    But most traders expect more upside to be difficult, with
milder, spring-like temperatures likely to curb heating demand
in the coming weeks, before much warmer weather sparks any early
cooling demand.
    As of 9:26 a.m. EDT (1326 GMT), front-month May natural gas
futures on the New York Mercantile Exchange were at $4.37
per million British thermal units, down 3.1 cents, or less than
1 percent.
    The contract rose to $4.429 on Thursday, the highest level
for a nearby contact since late July 2011.
    The latest National Weather Service six- to 10-day forecast,
issued on Thursday, again called for below-normal temperatures
for about the eastern half of the nation and mostly above-normal
readings in the West.
    Nuclear outages totaled 27,900 megawatts, or 28 percent of
U.S. capacity, down from 28,500 MW out on Thursday, but up from
24,100 MW out a year ago and a five-year average outage rate of
25,300 MW. 
    
    WEEKLY INVENTORY BUILD BELOW EXPECTATIONS
    Thursday's gas storage report from the U.S. Energy
Information Administration showed domestic inventories rose last
week by 31 billion cubic feet, below Reuters poll estimates for
a 34 bcf build and the five-year average gain of 39 bcf for that
week. 
    Stocks, at 1.704 trillion cubic feet, are nearly 32 percent
below last year and more than 4 percent below the five-year
average.

    Inventories started the heating season at record highs, but
two weeks ago stocks slid below the five-year norm for the first
time since September 2011.
    Early injection estimates for next week's report range from
24 bcf to 48 bcf versus a 43-bcf build during the same week last
year and a five-year average rise for that week of 50 bcf.
    Injections during the April-through-October stock building
season on average total about 2 tcf, meaning stocks could head
into next winter with about 3.7 tcf in the ground, well above
what would be needed to meet even the coldest winter demand, but
nearly 6 percent below last year's record peak of 3.929 tcf.
    Traders were waiting for the next Baker Hughes gas
drilling rig report to be released later Friday. Data last week
showed the gas-directed drilling rig count rose two from the
prior week's 14-year low, to 377.