UPDATE 1-U.S. natural gas futures end lower on tepid weather

Mon Dec 31, 2012 4:16pm EST

Related Topics

* Cold weather in U.S. Northeast supports cash prices
    * NYMEX futures prices end 2012 up 12 pct vs. 2011
    * EIA natgas storage report delayed one day due to holiday

 (Updates with settlement)
    NEW YORK, Dec 31 (Reuters) - Front-month U.S. natural gas
futures prices ended the day more than three percent lower on
Monday as the outlook for moderating temperatures and weaker
demand sunk prices.
    Front-month New York Mercantile Exchange February natural
gas futures ended 3.4 percent down, or 11.8 cents lower,
at $3.351 per million British thermal units.
    Even as cash prices soared in some regions on near-term
frigid weather, futures prices dropped on the longer-term
weather forecasts that called for above-normal temperatures in
major consuming regions.
    The National Weather Service forecast issued on Sunday for
the 8-14 day period expected a 33-to-50 percent chance of
above-normal temperatures across the eastern third of the U.S.
    That contrasted sharply with the near freezing weather in
New York on Monday, where spot prices rose to a near two-year
high. 
    In the cash market, the benchmark Henry Hub delivery point
in Louisiana averaged $3.43, up 3 cents from Friday, while
Chicago was up 9 cents at $3.58. Prices in New York averaged
$16.88, up from $10.59 on Friday.
    The U.S. Henry Hub spot natural gas price for 2012 averaged
$2.77, a 13-year low. 
    For the year, natural gas was the third best performing
commodity on the Reuters Jefferies CRB Index, rising 12 percent
from the closing price of 2011. 
    
    Click for graphic of Reuters Jefferies CRB Index
    here
    
    As prices fell to 10-year lows in April and hot weather
boosted gas-fired electricity demand, utilities switched to
burning cheaper gas rather than coal, in turn raising demand for
gas and supporting prices.
    Prices were less than one percent higher at the end of the
fourth quarter compared with the third quarter's end at $3.32
per mmBtu.
    Even above-average nuclear power outages did not support
natural gas prices on Monday. Gas-fired plants generally replace
lost nuclear power generation when units are offline for
maintenance.
    There were 11,000 megawatts, or 11 percent, of nuclear
capacity offline on Monday in the U.S. compared with 5 percent
last year and the five-year average. 
    Storage draws are expected to be stronger in the next two
weeks as heating demand has risen as temperatures have dropped.
    Last week, the U.S. Energy Information Administration
reported that 72 billion cubic feet of gas were taken out of
storage to meet demand. That compared to the expectation of a 76
bcf draw in the Reuters poll.
    (Storage graphic: link.reuters.com/mut84t)
    In this week's EIA report, traders and analysts so far
expect a draw of between 100 bcf to 141 bcf, compared to 77 bcf
of gas taken out of storage during the equivalent week last
year.
    The five year average draw is 111 bcf.
    Analysts at Thomson Reuters Natural Gas Analytics expect a
preliminary draw of 125 bcf in this week's EIA report.
    The report, which is generally released on a Thursday, will
be released one day later on Friday due to the New Year's Day
holiday on Tuesday.

 (Reporting by Jeanine Prezioso; Editing by Marguerita Choy)
FILED UNDER: