Weekday demand lifts US Henry Hub gas from 31-mo low
* Benchmark Henry Hub up from lowest mark since Sept. 2009 * Prices rise across the nation first time in seven sessions * Gas futures also higher, up from Friday's 10-year low * Coming Up: API oil data Tuesday, EIA oil data Wednesday By Eileen Houlihan NEW YORK, April 16 (Reuters) - Most U.S. spot natural gas prices rose for the first time in seven sessions on Monday, with benchmark Henry Hub gas rising from its lowest price in more than two years amid the return of weekday demand and arrival of hot weather in the Northeast. Mild spring weather had curbed any late-season heating or early-season cooling demand for the past several weeks, pushing both cash gas and futures prices to new lows. In addition, one of the mildest winters on record left inventories bulging ahead of the injection season. But a brief bout of heat in the Northeast spurred some air conditioning demand across the region, though most traders expect the gains to be short-lived, with milder weather on tap for the coming days. Gas for delivery at the nation's benchmark supply point Henry Hub NG-W-HH in Louisiana rose 1 cent on average to $1.88 per million British thermal units. Hub cash gas averaged $1.87 on Friday, matching its lowest price since September 2009, Reuters data showed. Late deals were done at about a 9-cent discount to the front-month May natural gas contract on the New York Mercantile Exchange, little changed from deals done late Friday at an 8-cent discount. But Hub cash prices are still down over $3, or 62 percent, from their 2011 high of $4.92, reached during a June heat wave. Hub cash prices have also not been over $4 since mid-September and have failed to break above $3 this year. Monday's daily Hub average remained below the April monthly index of $2.19 and well below the year-ago price of $4.21. On NYMEX, the front-month contract rose 3.5 cents to finish at $2.016, after sliding Friday to a 10-year spot-chart low of $1.959. Monday was the first day in six sessions the front month failed to make a new low. In major consuming markets, gas for Tuesday delivery on the Transco pipeline at the New York citygate NG-NYCZ6 rose 6 cents on average to $2.09, while Chicago gas NG-CHGC was 9 cents higher on the day at $2.01. After highs in the 80s Fahrenheit on Monday, temperatures in New York were seen mostly in the high 60s to low 70s over the next several days, while Chicago highs were seen mostly in the 60s F, according to the Weather Channel's weather.com. The National Weather Service's six- to 10-day outlook issued on Sunday called for above-normal readings for about the western two-thirds of the nation and below-normal readings across the eastern third. RECORD INVENTORIES U.S. Energy Information Administration data last week showed total gas inventories rose by just 8 billion cubic feet to 2.487 trillion cubic feet. But storage remains at record highs for this time of year, standing nearly 56 percent above last year and about 59 percent above the five-year average level. (Storage graphic: link.reuters.com/mup44s ) Early injection estimates for this week's EIA report range from 19 bcf to 41 bcf versus last year's adjusted build of 42 bcf and the five-year average increase for that week of 26 bcf. If weekly stock builds through October match the five-year average pace, inventories would top out at 4.595 tcf, or about 12 percent above peak estimated capacity of about 4.1 tcf. That could tank prices later in the injection season if storage caverns fill up and force more gas into a well-supplied market. PRODUCTION ALSO STILL AT RECORD HIGHS The EIA's short-term energy outlook last week also offered little hope for bulls, with the agency sharply raising its estimate for marketed gas production this year for a third straight month. EIA said it expects 2012 gas output to climb by 3 bcf per day, or 4.5 percent, to a record 69.22 bcfd, up from its March outlook that had output this year at 67.91 bcf daily. EIA also forecast a significant 2.8 bcf per day, or 4.3 percent, gain in consumption this year, primarily due to more utilities switching from pricier coal to cheaper gas. But that increase was not expected to be enough to tighten an over supplied gas market. Production growth is expected to slow this year as low prices hit plans for new drilling, but the sharp decline in the Baker Hughes gas rig count -- down a third since peaking at 936 in October -- has not yet reduced output partly due to increased drilling efficiency. The gas-directed rig count has fallen in 13 of the last 14 weeks, sinking on Friday to its lowest in 10 years, but rising output from shale has kept production on an upward track. (Rig graphic: r.reuters.com/dyb62s ) MORE FUNDAMENTALS Spring nuclear power plant outages were running at about 27,500 megawatts, or 28 percent, on Monday, up from about 26,200 MW out a year ago and a five-year outage rate of about 23,100 MW. Traders said the outages should add more than 1 bcf to daily gas demand. Average prices at other spot gas market points and previous day prices follow (US$/mmBtu) 04/16/12 04/13/12 Henry Hub 1.88 1.87 New York citygate 2.09 2.03 Chicago citygate 2.01 1.92 Panhandle (Mid-continent) 1.80 1.73 Northern at Demarcation (Minn.) 1.90 1.81 Southern California border 2.28 2.21 Katy Hub (East Texas) 1.86 1.83 Waha (West Texas) 1.83 1.81 Dominion-South (Appalachia region) 1.96 1.93 Columbia TCO (Appalachia region) 1.96 1.91 For more U.S. Spot Natural Gas prices click on <0#NG-US> RELATED LINKS - Canadian Spot Natural Gas Prices..............<0#NG-CA> - U.S. Spot Gas versus Oil Comparisons.......... - BTU U.S. Spot Natural Gas Prices..............<0#NG-BTU> - U.S. Nuclear Power Reactor Outage Table ...... - North American Power Plant Outage Table ..... - North American Power Transmission Table ..... - U.S. EEI Electricity Output Report ........... - U.S. EEI Electricity Output Table ............ EEI- - NYMEX Natural Gas Futures .................... <0#NG:> - NYMEX Crude Oil Futures .......................<0#CL:> (Reporting by Eileen Houlihan; Editing by Bob Burgdorfer)
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