U.S. natgas futures seesaw early as mild weather weighs

Fri May 10, 2013 9:29am EDT
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* Front month still well below recent 21-month high
    * Weather moderating over most of the country
    * Nuclear power plant outages remain above average
    * Coming up: Baker Hughes gas drilling rig data Friday

    By Eileen Houlihan
    NEW YORK, May 10 (Reuters) - U.S. natural gas futures
seesawed on either side of unchanged early on Friday, with a
slight bias to the downside as mild, spring-like weather
blanketed the country and another larger-than-expected weekly
inventory build was reported a day earlier.
    Still, prices remain well under last week's 21-month high.
    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 9:24 a.m. EDT (1324 GMT), front-month June natural gas
futures on the New York Mercantile Exchange were at
$3.969 per million British thermal units, down 1.4 cents, after
trading between $3.937 and $4.01.
    The contract hit a one-month low of $3.883 on Thursday,
after climbing to a 21-month high of $4.444 last week.
    The National Weather Service's latest six- to 10-day
forecast issued on Thursday called for above-normal temperatures
for about the western half of the nation and below-normal
readings in the Southeast. Near-normal temperatures were
expected for the Midwest, mid-Atlantic and Northeast.
    Nuclear plant outages totaled 19,700 megawatts, or 20
percent of U.S. capacity, down from 20,900 MW out on Thursday
and 21,300 MW out a year ago, but up from a five-year average
outage rate of 19,600 MW. 
    Thursday's gas storage report from the U.S. Energy
Information Administration showed domestic inventories rose last
week by 88 billion cubic feet, above Reuters poll estimates for
an 83-bcf build, a year-ago gain of 30 bcf, and a five-year
average build of 69 bcf for that week. 
    But inventories, which started the injection season about
three weeks later than expected due to the cold spring, are at
1.865 trillion cubic feet, more than 28 percent below last year
and 5 percent below the five-year average.

    Early injection estimates for next week's EIA report range
from 87 bcf to 108 bcf versus a 56-bcf build in the same week
last year and a five-year average rise for that week of 83 bcf.
    Traders awaited the next Baker Hughes gas drilling
rig report, due later on Friday. 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.