NEW YORK, Dec 26 (Reuters) - U.S. natural gas futures slipped slightly on Thursday, but expectations for a bullish weekly inventory report on Friday and cold weather forecasts for the next two weeks helped limit the downside.
Commodity Weather Group noted that computer models continued to project a colder-than-normal pattern over the next two weeks for the central, eastern and southern United States, with the strongest cold expected in the six- to 10-day period.
At 9:25 a.m. EST (1425 GMT), front-month January gas futures on the New York Mercantile Exchange, which expire on Friday, were down 1 cent at $4.406 per million British thermal units after trading between $4.391 and $4.465.
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.
The steady move up in prices over the last seven weeks has broken some key technical resistance along the way and turned the chart picture bullish. But some traders said the market was overbought and due for some selling by longs taking profits.
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.
This Friday’s Energy Information Administration report is likely to show another above-average drawdown. Estimates range from 149 billion to 192 billion cubic feet, with most in the mid-170s. Stocks fell 74 bcf during the same week last year, while the five-year average decline for the week is 125 bcf.
The report will be delayed one day this week due to the Christmas holiday.
EIA data last week showed total gas inventories fell by a record 285 bcf, eclipsing the previous benchmark drop of 274 bcf set in January 2008.
Total stockpiles stand at 3.248 trillion cubic feet, 488 bcf, or 13 percent, below last year, and 261 bcf, or 7 percent, below the five-year average.
If drawdowns for the rest of the heating season match the five-year average pace, storage would end winter below 1.5 tcf. That would be the lowest end-winter inventory since 2008 and could help prop up prices next year as utilities scramble to rebuild stocks for next heating season.
Nuclear plant outages on Thursday totaled 2,043 megawatts, or about 2 percent of U.S. capacity. That was little changed from Tuesday’s total of 2,058 MW, but well below the 11,459 MW out a year ago and the five-year average outage rate of 5,530 MW.