April 12, 2013 / 1:43 PM / in 5 years

U.S. natgas futures surge 2 pct to more than 20-month high

* Front month at highest mark since late July 2011
    * Cold weather back on tap in consuming regions
    * Power plant outages remain strong
    * Coming Up: Baker Hughes gas drilling rig data Friday

    By Eileen Houlihan
    NEW YORK, April 12 (Reuters) - U.S. natural gas futures rose
nearly 2 percent early on Friday, lifted to their highest mark
in more than 20 months amid a tightening supply picture and more
cold weather returning to consuming regions of the nation late
this week.
    In addition a slew of spring power plant outages were
helping to keep demand for gas-fired generation firm.
    Gas futures are up about 36 percent since mid-February,
lifted by cold late-winter weather that put a huge dent in
inventories, above-average nuclear power plant outages and
stronger price expectations.
    But most traders expect more upside to be difficult, with
spring-like weather expected by late-month seen easing heating
demand before summer cooling demand begins.
    As of 9:24 a.m. EDT (1324 GMT), front-month May natural gas
futures on the New York Mercantile Exchange were at
$4.202 per million British thermal units, up 6.3 cents, or
nearly 2 percent.
    The contract rose as high as $4.24 in electronic trade, the
highest mark for a nearby contact since late July, 2011.
    After some cold in the Midwest over the next few days, the
latest National Weather Service six to 10-day forecast issued on
Thursday called for more below-normal readings in the
mid-Continent and above-normal readings in the Southeast and
    Nuclear outages totaled 22,300 megawatts, or 22 percent of
U.S. capacity, up from 21,900 MW out on Thursday, but down from
25,200 MW out a year ago and a five-year average outage rate of
22,900 MW. 
    Thursday's gas storage report from the U.S. Energy
Information Administration showed domestic inventories fell last
week by 14 bcf, below Reuters poll estimates for a 21 bcf draw,
but above the year-ago gain of 11 bcf and the five-year average
build of 15 bcf for that week. 
    Domestic gas inventories of 1.673 trillion cubic feet are
nearly 33 percent below last year's record high and nearly 4
percent below the five-year average.

    Gas inventories started the heating season at record highs,
but last week's data showed stocks slid below the five-year norm
for the first time since September 2011.
    This week's decline should be the last of the heating
season, with estimates for next week's report all looking for a
modest build.
    Early injection estimates for next week's report range from
16 bcf to 55 bcf versus a 21-bcf build during the same week last
year and a five-year average rise for that week of 39 bcf.
    Total gas pulled from storage this winter is about 2.25 tcf,
roughly 770 bcf, or 52 percent, more than last year and about 15
percent more than the normal heating-season draw.
    Traders were waiting for the next Baker Hughes gas
drilling rig report to be released later Friday. Data last week
showed the gas-directed drilling rig count fell 14 to a 14-year
low of 375.

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