3 Min Read
* Front month remains below last week's 21-month chart high * Above-normal temperatures on tap for most of the United States * Nuclear power plant outages still above average By Eileen Houlihan NEW YORK, April 22 (Reuters) - U.S. natural gas futures slid about 2 percent early on Monday, as weather forecasts for late this month and early next began to show a return to above-normal temperatures, expected to curb recent late-season heating demand. Lingering cold in consuming regions, ongoing spring power plant outages and a tightening supply picture all helped lift nearby gas futures to their highest level in nearly 21 months last week. Gas futures are still up about 39 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 now on the horizon expected to curb heating demand before much warmer weather sparks any early cooling demand. As of 9:28 a.m. EDT (1328 GMT), front-month May natural gas futures on the New York Mercantile Exchange were at $4.311 per million British thermal units, down 9.7 cents, or just over 2 percent. The contract rose to $4.429 last week, the highest level for a nearby contact since late July 2011. The latest National Weather Service six to 10-day forecast issued on Sunday called for above-normal temperatures for nearly the entire country. Nuclear outages totaled 25,800 megawatts, or 26 percent of U.S. capacity, down from 27,900 MW out on Friday, but up from 25,400 MW out a year ago and a five-year average outage rate of 24,400 MW. INJECTION SEASON OFF TO SLOW START Last week's gas storage report from the U.S. Energy Information Administration showed domestic inventories rose the prior 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 three weeks ago stocks slid below the five-year norm for the first time since September 2011. Early injection estimates for this 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. Baker Hughes gas drilling rig data on Friday showed the gas-directed rig count rose two to 379, after hitting a 14-year low of 375 three weeks ago.