February 21, 2013 / 2:17 PM / 5 years ago

Profit taking weighs on US natgas futures ahead of EIA stocks data

NEW YORK, Feb 21 (Reuters) - Front-month U.S. natural gas
futures slipped slightly early on Thursday, pressured by profit
taking after two straight days of gains and ahead of what should
be a bearish weekly inventory report later this morning.
    But despite the pullback, traders said chilly forecasts for
the Northeast and Midwest for the next week or more should stir
more heating demand and help limit the downside.
    In addition, they noted that gas prices were still low
enough to prompt some utilities to switch from coal to gas to
generate power, while hefty nuclear plant outages this week of
about 15,000 megawatts could boost gas demand further as colder
weather drives up demand. 
    Gas-fired units are typically used to offset any shut
nuclear generation.    
    At 9:05 a.m. EST (1405 GMT), front-month gas futures 
on the New York Mercantile Exchange were down 3.9 cents, or 1.2
percent, at $3.24 per million British thermal units after
trading between $3.231 and $3.283.
    The nearby contract had gained 4 percent in the previous two
sessions after losing 3.6 percent last week.
    AccuWeather.com expects temperatures in the Northeast and
Midwest, key gas consuming regions, to range from normal to
below normal for the next week, with overnight lows holding in
the 20s and low-30s Fahrenheit during the period.
    But even with supportive weather ahead, many traders
remained skeptical of any upside in prices with winter nearly
over, inventories still high and production flowing at or near
an all-time peak.
    Weekly inventory draws have come in below market
expectations for three straight weeks and that trend may
continue in Thursday's U.S. Energy
    If drawdowns for the rest of winter match the five-year
average pace, inventories will end March at 2.076 tcf, about 20
percent above normal but 16 percent below last year, when stocks
finished a very mild heating season at a record high 2.48 tcf.
    Baker Hughes will issue its next drilling rig report
on Friday. While the company's dry gas rig count has fallen in
five of the last six weeks and is hovering just above a 13-1/2
year low hit three months ago, record high production has shown
no significant signs of slowing.
    EIA expects marketed gas production in 2013 to hit a record
high for the third straight year.

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