UPDATE 3-U.S. natgas futures end lower, milder weather weighs

Tue May 28, 2013 2:55pm EDT
 
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* Front month remains well under recent 21-month high
    * Weather forecasts mainly mild for next two weeks
    * Nuclear power plant outages back above normal
    * Coming up: EIA natgas storage data on Thursday


    By Eileen Houlihan
    NEW YORK, May 28 (Reuters) - U.S. natural gas futures ended
down more than 1 percent on Tuesday, as forecasts for mild
weather hit market sentiment even though cash gas prices rose
due to the return of weekday industrial demand after the
Memorial Day holiday weekend.
    Traders said fairly mild weather expected for the next two
weeks should curb late-season heating and early-season cooling
demand and lead to more above-average inventory injections.
    "Weather forecasts are pointing to a fluctuating pattern
across the East in the coming weeks, with above to well
above-average temperatures expected in the next five days
followed by normal to below-normal temperatures in the six- to
10-day period," said Addison Armstrong, senior director of
market research at Tradition Energy in Stamford, Connecticut.
    Armstrong said the fluctuating weather patterns and early
expectations for an above-average storage injection weighed on
the market. 
    Front-month June natural gas futures on the New York
Mercantile Exchange slid 6.3 cents, or 1.49 percent, to
settle at $4.174 per million British thermal units.
    The nearby contract, which expires on Wednesday, traded
between $4.13 and $4.308.
    The front month hit a one-month low of $3.883 on May 9 after
climbing to a 21-month high of $4.444 on May 1.
    Other months ended lower as well, with summer months ending
down 6 cents each.
    In the cash market, gas for Wednesday delivery at the NYMEX
benchmark Henry Hub in Louisiana rose 4 cents to
$4.19, with late deals firming to 4 cents under the June
contract, from deals done late Friday at a 6-cent discount.
    Gas on the Transco pipeline at the New York citygate jumped 35 cents to $4.41. 
    The National Weather Service's six- to 10-day forecast and
the eight- to 14-day outlook, both issued on Monday, called for
above-normal temperatures for most of the country. But traders
said much of the above-normal readings may not be hot enough to
spark heavy air-conditioning demand yet.
    Nuclear plant outages totaled 14,700 megawatts, or 15
percent of U.S. capacity, down from 16,500 MW out a year ago,
but up from a five-year average outage rate of 13,900 MW.
 
    Early injection estimates for Thursday's gas storage report
from the U.S. Energy Information Administration range from 80
billion cubic feet to 103 bcf versus a 72-bcf build in the same
week last year and a five-year average rise for that week of 92
bcf.