U.S. natgas futures edge up early, cold outlook lends support
NEW YORK, Nov 15 (Reuters) - U.S. natural gas futures edged higher early Friday in seesaw trade, as investors shrugged off mild weekend weather forecasts and focused instead on the colder temperature outlook for next week that should stir more heating demand. After a brief, late-week warm-up in the Northeast and Midwest, Commodity Weather Group noted that the six-to-15-day forecast remained variable, but cool temperatures were still expected across much of the East and South. While that should lift demand for space heating, many traders see only limited upside potential for prices until colder weather is sustained, with stockpiles comfortable and production flowing at a record-high pace. At 9:25 a.m. EST (1425 GMT), front-month gas futures on the New York Mercantile Exchange were up 2.5 cents at $3.63 per million British thermal units, after trading between $3.575 and $3.633. The nearby contract, which eked out a 1.3 percent gain last week in its first weekly rise in four weeks, is up about 2 percent so far this week. Many traders viewed Thursday's 20-billion-cubic-foot weekly natural gas inventory build reported by the U.S. Energy Information Administration as neutral for prices. But they noted that total domestic gas inventories of 3.834 trillion cubic feet were just 2 percent below last year's record highs at that time and 1.5 percent above the five-year average. That build should be the last of season, with early withdrawal estimates for next week's storage report ranging from 15 bcf to 41 bcf. That would compare with the 36 bcf draw of a year earlier and the five-year average decline of 2 bcf for that week. 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. Nuclear plant outages on Friday totaled 11,202 megawatts, or about 11 percent of U.S. capacity. That was up from Thursday's total of 9,857 MW but well below the 25,718 MW out one year ago and the five-year average outage rate of 17,984 MW.
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