UPDATE 3-U.S. natural gas futures edge up with hot weather forecasts
* U.S. Northeast, Midwest expect hotter weather * Outlook for Texas and the South still fairly mild * Coming up: Reuters natgas storage poll on Wednesday By Joe Silha NEW YORK, June 18 (Reuters) - U.S. natural gas futures ended higher for a second straight day on Tuesday, driven by forecasts for hotter weather in the Northeast and Midwest that should force more homeowners and businesses to crank up their air-conditioners. Mild late-spring weather pressured front-month gas futures down nearly 12 percent over the last three weeks, the biggest three-week slide for the nearby contract in six months. But with heat now forecast for northern-tier states later this week and next week, gas prices are up nearly 5 percent so far this week, with more gains possible if the forecast holds. "I think there was some short covering and continued buying on the warmer weather outlook for the Northeast," said Gelber & Associates analyst Aaron Calder. Front-month gas futures on the New York Mercantile Exchange ended up 3 cents, or 0.8 percent, at $3.905 per million British thermal units after trading between $3.865 and $3.952. The front month posted a three-month low of $3.71 on Wednesday. Calder noted that shorts may be covering after several tests of support in the low-$3.70s per mmBtu over the last week. The U.S. National Hurricane Center said Tropical Depression Two was expected on Wednesday to move over the Bay of Campeche in the southwest Gulf of Mexico. Traders do not expect the system to disrupt any U.S. oil or gas production in the Gulf. Separately, a section of the Florida Gas Transmission's natural gas pipeline in Louisiana was shut after an explosion on Tuesday. There were no injuries reported, and the incident was not expected to disrupt shipments to customers. Commodity Weather Group noted that computer models turned a bit warmer this morning for the Midwest and East in the next six to 10 days, but the private forecaster still expects mostly seasonal readings for Texas and the South during the period. Many traders remained skeptical of the upside, with inventories at comfortable levels and production still flowing at or near a record high. While the Baker Hughes gas drilling rig count is still hovering at 353, just above the 18-year low of 350 posted five weeks ago, U.S. gas production has not slowed much, if at all from last year's record high. The Energy
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