U.S. natgas futures edge higher after bouncing off support
* Front month still below recent 21-month high * Weather expected to moderate over next two weeks * Nuclear power plant outages remain below average By Eileen Houlihan NEW YORK, May 8 (Reuters) - U.S. natural gas futures edged higher on Wednesday, bouncing off technical support after sinking to a more than one-month low on the spot chart amid milder, spring-like weather and expectations for another large weekly inventory build. Last week's unexpectedly large weekly inventory build led to a 7-percent selloff on Thursday before prices recovered slightly on Friday. Prices remain well under last week's 21-month high hit at midweek. A long, cold winter put a huge dent in inventories and lingering cool weather this spring led to a slow start to the injection season. But the onset of milder spring weather starting this week has curbed late-season heating demand before heavy cooling loads kick in. As of 9:38 a.m. EDT (1338 GMT), front-month June natural gas futures on the New York Mercantile Exchange were at $3.958 per million British thermal units, up 3.8 cents, after sliding as low as $3.895, the lowest mark since early April. After breaking minor support at the 20-day and 40-day moving averages over the last week, chart traders said Tuesday's weak close broke support in the $3.94 area, which was the 38.2 percent Fibonacci retracement of the $1.319 move from the February low of $3.125 to last week's 21-month high of $4.444. The latest National Weather Service eight to 14-day forecast issued on Tuesday called for above-normal temperatures for about the western third of the nation and below-normal readings in the Southeast and most of Texas. Near-normal temperatures were expected for the Midwest, mid-Atlantic and most of the Northeast. Nuclear plant outages totaled 18,800 megawatts, or 19 percent of U.S. capacity, down from 18,900 MW out on Tuesday, 21,700 MW out a year ago and a five-year average outage rate of 20,500 MW. LARGER-THAN-EXPECTED BUILD BUT STOCKS BELOW NORMAL Last week's gas storage report from the U.S. Energy Information Administration showed domestic inventories rose in the prior week by 43 billion cubic feet, above Reuters poll estimates for a 28 bcf build and the year-ago gain of 31 bcf. But inventories started the injection season about three weeks later than expected due to the cold spring. Stocks, at 1.777 trillion cubic feet, are nearly 31 percent below last year and more than 6 percent below the five-year average. Early injection estimates for Thursday's EIA gas storage report range from 58 to 91 bcf, versus a 30 bcf build in the same week last year and a five-year average rise for that week of 69 bcf. Baker Hughes data last week showed the number of rigs drilling for natural gas in the United States fell by 12 to an 18-year low of 353.
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