June 3, 2013 / 2:03 PM / 4 years ago

UPDATE 3-Front U.S. natgas futures end up, 1st gain in 6 sessions

* Chart buying underpins gains after last week's slide
    * Milder weather forecasts likely to slow demand

    By Joe Silha
    NEW YORK, June 3 (Reuters) - Front-month U.S. natural gas
futures ended higher on Monday for the first time in six
sessions, on light technical buying and bargain hunting after
last week's slide and despite milder weather forecasts for the
next two weeks that should slow demand.
    Chart traders said the market was due for a bounce after
dropping 6 percent last week, its biggest weekly stumble since
the middle of December.
    "It wasn't much of a bounce. The market seems stalled after
the big slide last week," said Patrick Saunders at Albans
Energy, an independent consulting firm in Houston.
    Front-month gas futures on the New York Mercantile
Exchange ended up 0.7 cent at $3.991 per million British thermal
units after trading between $3.951 and $4.04. Most deferred
months also settled with slight gains.
    The front contract lost 8.3 percent in May, its largest
monthly decline since last August.
    Technical support for the front contract was seen first in
the $3.95 area, with resistance at about $4.12-4.13.
    Private forecaster Commodity Weather Group said it expected
seasonal or below-seasonal temperatures to continue for the
eastern half of the nation for the next two weeks, with heat
mostly centered in the interior West and Southwest.
    Baker Hughes data on Friday showed the gas-directed
rig count was unchanged for a second straight week at 354. The
count is hovering just above an 18-year low of 350 posted three
weeks ago. 

    Despite the steep decline in dry gas drilling over the last
year and a half, production has not slowed much, if at all.
    U.S. Energy Information Administration data on Friday showed
gross natural gas production in March fell for the third time in
four months, but output is running more than 1 percent above
last year and the agency still expects production in 2013 to
post a record high for a third straight year.         
    While traders said strong heat last week may have slowed
storage injections, they said the impact was partly offset as 
earlier cool weather and the U.S. Memorial Day holiday on May 27
likely slowed some demand.

    Early injection estimates for Thursday's EIA report range
from 80 to 95 bcf versus a 63 bcf build during the same week
last year and a five-year average gain for that week of 92 bcf.

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