U.S. natural gas futures hold modest gains as cold moves in
NEW YORK, Dec 26 (Reuters) - Front-month U.S. natural gas futures held modest gains early Wednesday, backed by chilly U.S. weather forecasts for the next 10 days that should boost gas demand by forcing homeowners and businesses to crank up their heaters. After mild early December weather pressured the front month to a 2-1/2-month low at mid month, traders noted heating demand was picking up with falling temperatures, first in the Midwest and now in the East. But while the next 10 days were likely to remain below normal for most of the country, traders said some forecasters were looking for a warm-up in the 15-day outlook. Unless the cold is sustained, most traders agree it will be difficult for gas prices to move much higher with inventories still at record levels for this time of year and production flowing at or near an all-time peak. At 9:45 a.m. EST (1445 GMT), front-month January natural gas futures on the New York Mercantile Exchange, which expire on Thursday, were up 2.5 cents, or 0.8 percent, at $3.371 per million British thermal units after trading between $3.30 and $3.388. The front contract, which hit a 13-month high of $3.933 five weeks ago, slid to a 2-1/2-month low of $3.261 in mid-December. While gas demand can slow during the holidays regardless of weather because many schools and businesses are closed, traders said prices could garner support from nuclear plant outages. which are still running at about 11,400 megawatts this week, or nearly 6,000 MW above average for this time of year. Gas-fired plants are typically used to replace any lost nuclear generation Early cash quotes for Thursday delivery at Henry Hub NG-W-HH, a key supply point in Louisiana, gained 5 cents to $3.35 on fairly light, post-holiday volume of 310 million cubic feet. The Hub posted a 2-1/2-month low of $3.15 on Dec. 14. Early Hub differentials firmed to about 2 cents under NYMEX from a 7-cent discount on Monday. Prices on the Transco pipeline at the New York citygate NG-NYCZ6 jumped 18 cents to $4.14 on the cold late-week outlook. Volume was light at about 45 mmcf. Commodity Weather Group still expects a cold pattern to continue for most of the United States for the next 10 days, but the private forecaster noted some uncertainty about computer predictions for a warm-up in the 11- to 15-day outlook. (Reporting By Joe Silha; Editing by Maureen Bavdek)
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