U.S. natgas futures edge up on heat, extended forecasts trend milder

Mon Jun 24, 2013 9:25am EDT
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NEW YORK, June 24 (Reuters) - U.S. natural gas futures,
backed by hotter weather in the Northeast and Midwest early this
week, edged higher on Monday, but the milder trend in the
extended outlook helped limit the upside.
    "Gas prices have rebounded back to the upside amidst light
short-covering as this month's bidweek trading begins. Weather
forecasts, after the next couple days of above-normal
temperatures across the Midwest and Northeast, are cooler for
the first half of July," Addison Armstrong, senior director of
market research at Tradition Energy, said in a report.
    Prices sold off a bit late last week, but the front month
managed to eke out a 1 percent gain for the week, its first
weekly gain after sinking 12 percent in the previous three
    But without a sustained, broad-based heatwave, many traders
remained skeptical of any move up with inventories comfortable
and gas production still flowing at or near a record high.
    While heat is forecast for Texas and the West later this
week and next week, MDA Weather Services expects seasonal or
below seasonal temperatures to dominate the eastern half of the
nation during the six-to-10-day time frame.
    At 9 a.m. EDT (1300 GMT), July front-month gas futures
 on the New York Mercantile Exchange, which expire on
Wednesday, were up 2.9 cents at $3.80 per million British
thermal units after trading between $3.725 and $3.822. The front
contract posted a three-month low of $3.71 nearly two weeks ago.
    Baker Hughes data on Friday showed the gas-directed
rig count fell last week by four to an 18-year low of 349.    

    Despite a steep decline in dry gas drilling over the last 20
months, production has not slowed much, if at all.