UPDATE 3-US natgas futures end down for 2nd day, mild temps weigh
(Adds byline, trader quote, updates with closing prices) * High storage, production weigh on sentiment * Colder midmonth outlook continues to moderate * Coming up: Reuters natgas storage poll Wednesday By Joe Silha NEW YORK, Jan 8 (Reuters) - U.S. natural gas futures ended lower o n Tuesday f or a second straight day a s mild near-term weather and record high supplies co ntinued to pr essure the complex. With inventories still at record highs for this time of year and g overnment p roduction d ata t his week s howing gas f lowing at an all-time peak, many traders expect prices to remain on the def ensive until much colder weather forces homeowners and businesses to turn up their heaters. While below-normal temperatures were expected to return later in January, traders noted computer models continued to moderate the outlook. After a chilly week last week, MDA Weather Services expects temperatures for the eastern half of the United States to range from above to much-above normal for the next 10 days. Colder readings for most of the country were expected in the 11- to 15-day outlook, but the private forecaster noted changes overnight were mostly warmer and model support for any strong cold spell was faltering. "The forecasts look pretty mild for the next week. We're waiting to see if the cold shows up after that," a Pennsylvania-based trader said, also noting concerns about high production which hasn't fallen off like most analysts had expected. F ront-month gas futures on the New York Mercantile Exchange e nded d own 4 . 8 cents, or 1.5 percent, at $3.21 8 per million British thermal units after trading between $3.201 and $3.281. The front contract, which hit a three-month low of $3.05 on Wednesday, lost 5.2 percent last week. So far this week the contract is down another 2.1 percent as milder weather moved across the country and slowed overall demand. Traders said gas prices could pick up support from nuclear plant outages, which are running at about 8,550 megawatts this week, or 2,700 MW above average for this time of year. Gas-fired plants are typically used to offset any lost nuclear generation, but traders said the milder temperatures ahead were likely to lessen the need for replacement power. GAS DRILLING GAINS, PRODUCTION STILL NEAR RECORD Drilling for natural gas has fallen some 53 percent since peaking in 2011 at 936 in October, but so far production has not shown any signs of slowing. (Rig graphic: r.reuters.com/dyb62s) Energy Information Administration data on Monday showed that gross U.S. gas production in October climbed to 73.54 billion cubic feet per day, the second straight monthly record. Then on Tuesday, the agency said it expected marketed natural gas production in 2013 to rise by nearly 1 percent to an average of 69.84 billion cubic feet per day, which would be the third straight year of record output. ABOVE AVERAGE STORAGE LEVELS Total domestic gas inventories are still at record highs for this time of year, hovering at more than 12 percent above the five-year average. (Storage graphic: link.reuters.com/mut84t ) Withdrawal estimates for Thursday's EIA storage report ranged from 155 bcf to 192 bcf, with most in the low-180s. That would be well above the year-ago draw of 95-bcf and the five-year average decline for that week of about 149 bcf. (Reporting By Joe Silha; Editing by Grant McCool,Bob Burgdorfer and Diane Craft)
- Insight: How U.S. spying cost Boeing multibillion-dollar jet contract
- Exclusive: Secret contract tied NSA and security industry pioneer |
- With Fed out of the way, what's next on Wall Street?
- Yemeni al Qaeda says attack on hospital was mistake
- Insight: For Chinese farmers, a rare welcome in Russia's Far East