July 8, 2013 / 2:46 PM / 4 years ago

UPDATE 1-U.S. natural gas futures up 3 pct on weather, storm concerns

NEW YORK, July 8 (Reuters) - U.S. natural gas futures moved
sharply higher on Monday, underpinned by extended forecasts for
warmer weather in the Northeast and Midwest and concerns about a
new storm in the western Atlantic Ocean.
    "We're in a bit of a warming trend, so there's more power
load around," a Texas-based producer said.
    Despite concerns about Tropical Storm Chantal, traders noted
early computer runs showed the system steering clear of key Gulf
of Mexico gas-producing areas. The storm was seen heading across
the northern Caribbean, then turning north toward the east coast
of Florida. 
    At 10:25 a.m. EDT (1325 GMT), front-month gas futures 
on the New York Mercantile Exchange were up 12 cents, or 3.4
percent, at $3.737 per million British thermal units, after
trading between $3.612 and $3.742. The contract hit a 3-1/2
month low of $3.526 in late June.
    Early cash quotes for Tuesday delivery at Henry Hub , the benchmark supply point in Louisiana, climbed 13
cents to $3.65 on heavy volume of about 650 million cubic feet.
    Early Hub differentials weakened to about 4 cents under
NYMEX from a 3 cent discount on Friday.
    Prices on Transco pipeline at the New York citygate rose 26 cents to $4.06 on the warm early-week weather
despite the milder outlook for later in the week. Volume was
light at about 120 mmcf.
    Heat for the next two weeks remains focused in the West and
across northern tier states from the upper Midwest to Northeast,
 according to forecaster MDA Weather Services. Readings in the
Southeast were expected to average below normal.    
    With gas inventories only slightly below average for this
time of year and production still flowing at or near a record
peak, many traders expect price gains to be limited even if
weather forecasts remain fairly supportive.
    Early injection estimates for Thursday's Energy Information
Administration storage report range from 86 to 102 billion cubic
feet, versus a 34 bcf build during the same week last year and a
five-year average increase for that week of 74 bcf.

    Traders were waiting for clues on production when EIA
releases its short-term energy outlook on Tuesday.

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