UPDATE 3-US natgas futures end up 2 pct on cool near-term weather
* Nuclear power plant outages stay high, boost demand * Record-high storage, production limit price gains * Coming up: Reuters natgas storage poll Wednesday (Adds analyst's quote, technicals, updates prices) By Joe Silha NEW YORK, Nov 12 (Reuters) - U.S. natural gas futures, backed by chilly forecasts for the eastern half of the nation, ended higher on Monday, but record high supplies kept prices trapped in the recent trading range with little reason to break far in either direction. Traders noted that nuclear plant outages this week remained well above last year and the five-year average, a factor that may limit the downside in prices if chilly temperatures continue to force homeowners and businesses to crank up the heat. "Weather forecasts have turned from mostly warmer temperatures to more mixed. The market should not read too much into a short-term weather forecast that is likely to reverse itself in the coming weeks," Gelber & Associates analyst Aaron Calder said in a report. Nuclear outages on Monday were running nearly 9,000 megawatts above the same year-ago week, which could add as much as 1.5 billion cubic feet, or about 2 percent, to daily gas demand. Gas-fired power plants are typically used to replace lost nuclear generation. But with gas inventories at record highs and production flowing at, or near, a record peak, traders said any upward move in prices could prove difficult without sustained cold weather to boost demand. Front-month gas futures on the New York Mercantile Exchange ended up 6.7 cents, or near 2 percent, at $3.57 per million British thermal units after trading between $3.47 and $3.596. Technical traders said the nearby contract, which hit a one-year intraday high of $3.82 two weeks ago, has been in a seesaw pattern this month, closing up one day then down the next but overall losing just 3.3 percent so far. They noted that prices for the last week or so seemed stuck in a range between the high-$3.40s and $3.62, but most agreed a front month settle below $3.50 would be bearish. Forecaster MDA EarthSat expects temperatures for the eastern half of the nation to average normal or below normal this week, with milder weather moving into the upper Midwest late this week and next week. Colder trends were expected for the Southeast and much of the East Coast during the six- to 10-day period. RIGS HIT NEW LOW, PRODUCTION FAILS TO SLOW Baker Hughes data on Friday showed the gas-directed rig count fell last week by 11 to 413, the third drop in the last five weeks and the lowest since early June 1999. Drilling for natural gas has been in decline for most of the past year, with gas rigs falling some 56 percent since peaking at 936 in October 2011. The steep slide has fed expectations that producers might soon curb record output, but so far production has not shown any significant signs of slowing. (Rig graphic: r.reuters.com/dyb62s ) The associated gas produced from more-profitable shale oil and shale gas liquids wells has kept dry gas flowing at or near a record pace. New pipeline capacity scheduled late this year in some bottlenecked shale plays like Marcellus in Appalachia and Eagle Ford in Texas could also lead to more supply. The U.S. Energy Information Administration said last week it expected marketed gas production in 2013 to match 2012's record high estimated at 68.84 billion cubic feet per day. INVENTORIES HIT NEW HIGHS EIA data last week showed gas inventories for the week ended Nov. 2 rose by 21 bcf to a record of 3.929 trillion cubic feet. Storage this year has easily eclipsed the previous record high of 3.852 tcf hit last November, with one more build possible in this week's report. Early estimates for Thursday's EIA storage report range from a build of 15 bcf to a draw of 17 bcf. Last year during that week, stocks rose 20 bcf, while the five-year average is 17 bcf. (Storage graphic: link.reuters.com/mup44s ) While a huge inventory overhang, which peaked in late March at nearly 900 bcf, has been cut by 88 percent, storage is 93 percent full and will provide a comfortable cushion to meet any winter spikes in demand or unexpected disruptions in supply. (Additional reporting by Eileen Houlihan; editing by Sofina Mirza-Reid; and Peter Galloway)
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