UPDATE 3-U.S. natgas futures end up in seesaw trade, EIAs neutral

Thu Nov 14, 2013 3:36pm EST
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* EIA natgas storage build mostly seen as neutral
    * Cold extended forecast supports prices, despite warm up
    * Comfortable storage, record production limit upside
    * Coming Up: Baker Hughes rig data, CFTC trade data Friday

    By Joe Silha
    NEW YORK, Nov 14 (Reuters) - U.S. natural gas futures
reversed course and ended higher on Thursday as investors
focused on colder late-month weather that should stir more
demand and shrugged off weekly inventory data  and forecasts for
a brief warm up later this week.
    The U.S. Energy Information Administration reported that
total gas inventories rose last week by 20 billion cubic feet to
3.834 trillion cubic feet, just 2 percent below last year's
record highs at that time and 1.5 percent above the five-year
    Many traders viewed the build, likely to be the last of the
injection season, as neutral for prices, noting it came in close
to the Reuters poll estimate of 21 bcf and the five-year average
gain for that week of 19 bcf.
    "People were taking profits early, but there was decent
buying at the lower numbers. It feels like there's a floor under
the market, but with conflicting weather reports, I don't expect
a big price move in either direction right now," a
Pennsylvania-based cash trader said.
    Front-month gas futures on the New York Mercantile
Exchange ended up 3.9 cents, or 1.1 percent, at $3.605 per
million British thermal units, after trading between $3.491 and
    Prices, which had been trading down nearly 2 percent in the
$3.50 area before the EIA report was released at 10:30 a.m. EST,
mostly edged higher during the rest of the session.
    The nearby contract fell to a 2-1/2 month low of $3.379 per
mmBtu early last week, but finished the week up 1.3 percent, its
first weekly gain in four weeks. The contract is up about 1.3
percent so far this week. 
    Some technical traders said the market seemed stuck in a
range, waiting for a reason to break out. They pegged
front-month resistance in the $3.65 area, with support at $3.50
and then at recent lows in the $3.40 area.
    After a brief, late-week warm-up in the Northeast and
Midwest, MDA Weather Services noted the six- to 10-day and 11-
to 15-day forecasts still favored a colder-than-normal outlook
for the central and eastern United States.
    While that should stir more heating demand, many traders see
only limited upside potential for prices, with stockpiles
comfortable and production flowing at a record-high pace.
    Early withdrawal estimates for next week's storage report
range from 15 bcf to 46 bcf. That would compare to a 36 bcf draw
seen during the same year-ago week and the five-year average
decline for that week of 2 bcf.             
    Traders were waiting for the next Baker Hughes 
drilling rig report on Friday. The gas rig count has risen in 12
of the last 20 weeks, stirring talk that new pipelines and
processing plants may be encouraging producers to hook up more
wells and pump more gas into an already well-supplied market.   
    The EIA on Wednesday raised its estimate for domestic
natural gas production in 2014, expecting output to be up more
than 1 percent from 2013's record-high levels. 
    In the ICE cash market, gas for Friday delivery at Henry Hub , the benchmark supply point in Louisiana, slid 16
cents to $3.52, with late differentials weakening to about 5
cents under NYMEX from a 3-cent premium Wednesday.
    Gas on the Transco pipeline at the New York citygate tumbled 35 cents to $3.43 on the milder
late-week outlook. Chicago was 16 cents lower at
    For daily ICE U.S. cash gas prices, click on .