Profit taking pressures U.S. natgas futures ahead of EIAs
NEW YORK Dec 27 (Reuters) - U.S. natural gas futures, shrugging off expectations for a bullish weekly inventory report, lost ground early Friday, pressured by profit taking ahead of the weekend though the still-cold outlook for next week helped limit the downside.
Chilly early winter weather has helped drive the front month up about 25 percent since Nov. 1, with the contract posting a 2-1/2 year high of $4.532 on Monday. But the front contract is off nearly 1 percent so far this week, which could signal its first weekly loss in eight weeks.
MDA Weather Services noted that computer models turned significantly colder for the Midwest and Northeast in the six- to 10-day outlook. But the forecaster did note some moderation in the 11- to 15-day time frame.
At 9:25 a.m. EST (1425 GMT), front-month January gas futures on the New York Mercantile Exchange, which expire later today, were down 5.5 cents, or 1.2 percent, at $4.378 per million British thermal units after trading between $4.359 and $4.435.
The recent move up in prices broke some key technical resistance along the way and turned the chart picture bullish. But some traders said the market was overbought and due for a profit taking pullback as investors square books for the year.
Strong demand for heating this winter has burned up a lot of gas in inventory, with total storage withdrawals so far more than double what would normally be expected. That has prompted analysts to scale back end-winter inventory estimates.
U.S. Energy Information Administration data on Friday is likely to show another above-average inventory drawdown.
A Reuters poll on Thursday showed traders and analysts expect to see a 177 billion cubic feet weekly inventory draw when the EIA releases its storage report on Friday at 10:30 a.m. EST.
Stocks fell 74 bcf during the same week last year, while the five-year average decline for the week is 125 bcf. Continued...