UPDATE 3-Milder forecasts drive U.S. natgas futures to 3-1/2-month low
* Early-week heat in Northeast, Midwest seen moderating * Milder trend late this week, next week pressures prices * Coming up: Reuters weekly natgas inventory poll Wednesday By Joe Silha NEW YORK, June 25 (Reuters) - U.S. natural gas futures ended lower on Tuesday for a fourth straight session, with the front contract pressured to a 3-1/2-month low by milder weather forecasts for later this week and next week that should slow demand. Despite heat in the Northeast and Midwest early this week, front-month gas futures have fallen 8 percent in the last four trading days amid signs that the extended weather outlook is trending milder. "The weather is looking cooler than normal for the eastern half (of the country) through mid-July. The move lower today pretty much destroys technical support at $3.71 and could open an opportunity for prices to go lower," Gelber & Associates analyst Aaron Calder told Reuters. Front-month July gas futures on the New York Mercantile Exchange, which expire on Wednesday, ended down 9.2 cents, or 2.5 percent, at $3.647 per million British thermal units after slipping late to $3.645, the lowest price for the nearby contract since mid-March. Technical traders agreed Tuesday's weak close below key support could send prices lower, but some noted the market was overbought and due for a short-covering bounce, possibly ahead of Thursday's weekly government inventory report. But many traders remained skeptical of the upside without a sustained, broad-based heat wave, particularly with inventories comfortable and gas production still at or near a record high. While heat is forecast to continue in the West for the next two weeks, MDA Weather Services expects near-seasonal or below-seasonal temperatures to dominate the eastern half of the nation during the six-to-15-day time frame. The Baker Hughes gas drilling rig count fell to another 18-year low last week, but U.S. gas production has not slowed much, if at all, this year. The Energy Information Administration still expects gas output in 2013 to post a record high for a third straight year. Injection estimates for Thursday's EIA storage report range from 84 bcf to 95 bcf, with most estimates in the high-80s. That would be well above the 58-bcf build seen during the same week last year and the five-year average rise for that week of 79 bcf.
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