U.S. natgas futures seesaw early, tighter supply supports

Fri Apr 26, 2013 9:35am EDT
 
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* Front month remains below last week's 21-month chart high
    * Weather outlooks mixed for late April, early May
    * Nuclear power plant outages remain below average
    * Coming Up: Baker Hughes gas drilling rig data Friday

    By Eileen Houlihan
    NEW YORK, April 26 (Reuters) - U.S. natural gas futures
seesawed on either side of unchanged early on Friday, with
concerns over a tighter supply picture this year after another
light weekly inventory injection underpinning prices.
    Inventories started the injection season about three weeks
later than expected due to an unusually cold spring. Still
chilly weather early this week is expected to continue to slow
inventory builds and drive stocks further into deficit, relative
to the five-year average.
    The lingering cold dented inventories, while seasonal power
plant outages helped keep demand for gas-fired generation firm,
lifting nearby gas futures to their highest level in nearly 21
months last week. Futures are still up about 33 percent since
mid-February.
    But with milder, spring-like weather expected to slow demand
soon, most traders expect further upside to be difficult.
    As of 9:21 a.m. EDT (1321 GMT), front-month May natural gas
futures on the New York Mercantile Exchange, which expire
later Friday, were at $4.153 per million British thermal units,
down 1.4 cents.
    The contract, which moved in electronic trade between $4.14
and $4.182, 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 Thursday called for above-normal temperatures in a
large portion of the Southwest and a small part of New England,
with below-normal readings across the Southeast and in Texas.
    Nuclear outages totaled 23,200 megawatts, or 23 percent of
U.S. capacity, up from 22,900 MW out on Thursday, but down from
24,400 MW out a year ago and a five-year average outage rate of
24,400 MW. 
    
    ANOTHER LIGHT INVENTORY BUILD
    Thursday's gas storage report from the U.S. Energy
Information Administration showed domestic inventories rose last
week by 30 bcf, below Reuters poll estimates for a 32 bcf build,
the year-ago gain of 43 bcf and the five-year average build of
50 bcf for that week. 
    Stocks, at 1.734 trillion cubic feet, are nearly 32 percent
below last year and more than 5 percent below the five-year
average.

    Early injection estimates for next week's report range from
15 bcf to 40 bcf versus a 31-bcf build during the same week last
year and a five-year average rise of 67 bcf for that week.
    Traders waited for the next Baker Hughes Inc 
drilling rig report to be released on Friday. Data last week
showed the gas-directed rig count rose two to 379, after hitting
a 14-year low of 375 three weeks ago.