US natgas futures edge higher after Monday's big loss
* Front month below Monday's 2012 high * Nuclear power plant outages remain strong * Cool weather on tap in longer-term outlooks * Coming up: API oil data Tuesday, EIA oil data Wednesday By Eileen Houlihan NEW YORK, Oct 23 (Reuters) - U.S. natural gas futures edged higher early on Tuesday, with cooler weather in long-term outlooks and nuclear plant outages supporting prices despite some big losses the previous day. Early on Monday, the nearby contract rose to its highest level of the year before ending the trading day down about 5 percent. While most traders expect the cooler forecasts to limit the downside, others remain concerned that gas priced at well above $3 per million British thermal units will continue to lose market share to coal for power generation. As of 9:13 a.m. EDT (1313 GMT), front-month November natural gas futures on the New York Mercantile Exchange were at $3.465 per mmBtu, up 1.3 cents. They climbed on Monday to $3.648, the highest price for a spot contract since early December, according to Reuters data. The National Weather Service's six- to 10-day outlook issued on Monday called for below-normal temperatures for about the eastern half of the country, with above-normal readings only on the West Coast and in a small portion of New England. On the nuclear front, outages totaled about 26,200 megawatts, or 26 percent of U.S. capacity, up from 25,700 MW out on Monday, 19,500 MW out a year ago and a five-year outage rate of about 21,500 MW. RECORD INVENTORIES Last week's gas storage report from the U.S. Energy Information Administration showed domestic inventories rose the prior week by 51 billion cubic feet to 3.776 trillion cubic feet. Stocks remain 5 percent above year-ago levels and more than 7 percent above the five-year average. (Storage graphic: link.reuters.com/mup44s) While a huge inventory surplus, which peaked in late March at nearly 900 bcf, has been cut by 80 percent, inventories are still at record highs for this time of year. At 89 percent full, stocks are already above the average peak for the year of 3.7 tcf usually hit in early November. Without some unseasonably cold weather soon, stocks are likely to grow for three or four more weeks and easily end the injection season above last year's all-time high of 3.852 tcf. Early injection estimates for this week's EIA report range from 55 bcf to 77 bcf versus a year-earlier build of 95 bcf and the five-year average increase for that week of 65 bcf. RIG COUNT EDGES HIGHER Baker Hughes data on Friday showed the gas-drilling rig count had risen by five to 427, from a 13-year low the previous week. (Rig graphic: r.reuters.com/dyb62s) The count is down 54 percent since peaking at 936 last October, with the decline feeding expectations that producers were getting serious about stemming record supplies. But so far, there is little evidence that gas output is slowing. While dry gas drilling has become largely uneconomical at current prices, gas produced from more-profitable shale oil and shale gas liquids wells has kept output near record highs. (Editing by Dale Hudson)
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