U.S. natgas futures edge lower ahead of weekly storage data

Thu Jan 17, 2013 9:22am EST

Related Topics

* Front month still above recent 3-month spot low
    * Above-normal nuclear outages and cold weather limit losses
    * Record high production could limit upside
    * Coming up: EIA natgas storage data on Thursday

    By Eileen Houlihan
    NEW YORK, Jan 17 (Reuters) - U.S. natural gas futures edged
lower for a second straight day early Thursday, pressured by
more profit-taking after a four-day, 11-percent run higher.
    But with expectations that weekly government storage data
will show another healthy drawdown from inventories, cold
weather lingering in the eastern United States and above-average
nuclear power plant outages, most traders remained cautious.
    Traders and analysts expect data from the U.S. Energy
Information Administration to show a drop of about 136 billion
cubic feet when it is released at 10:30 a.m. EST (1530 GMT), a
Reuters poll showed. 
    Stocks slid just 89 bcf during the same week last year, but
on average over the past five years have fallen 144 bcf that
week.
    As of 9:16 a.m. EST (1416 GMT), front-month February natural
gas futures on the New York Mercantile Exchange were at
$3.412 per million British thermal units, down 2.3 cents, or
less than 1 percent.
    The front month fell to $3.05 in early January, a contract
low and the lowest mark for a spot contract since late
September.
    The latest National Weather Service six-to-10-day forecast 
issued on Wednesday trimmed the area of below-normal
temperatures expected to just the Northeast and parts of the
Midwest and mid-Atlantic, with normal or above-normal readings
for the remainder of the country.
    Nuclear outages totaled 9,200 megawatts, or 9 percent of
U.S. capacity, up from 9,100 MW out on Wednesday, 8,100 MW out a
year ago and a five-year average outage rate of about 6,600 MW.
 
    
    BIG STORAGE DRAW, BUT STOCKS ABOVE AVERAGE
    Last week's EIA gas storage report showed inventories had
fallen in the prior week by 201 bcf, above industry expectations
for a 186-bcf draw. 
    The decline easily beat last heating season's peak draw of
192 bcf during the week that ended Jan. 20, 2012, and may
reflect some permanent underlying growth in demand this year as
utilities switch from coal to cheaper gas for power generation.
    Despite the large draw, storage remains at 3.316 trillion
cubic feet, about 3 percent below year-ago levels but nearly 11
percent above the five-year average.
    (Storage graphic: link.reuters.com/mut84t)
    Inventories started the heating season in early November at
3.929 tcf, the fourth straight year when inventories have headed
into the heating season at an all-time peak.
    
    RIGS SLIDE, BUT OUTPUT NEAR RECORD
    Baker Hughes data last week showed the gas-directed rig
count had fallen by five to 434, its first drop in four weeks.
 
    Drilling for natural gas has mostly declined for more than a
year, with gas rigs down 54 percent since peaking at 936 in
October 2011.
    (Rig graphic: r.reuters.com/dyb62s)
    But the EIA also said last week that it expected gas output
in 2013 to rise to 69.84 bcf per day, the third straight annual
record.

 (Editing by Grant McCool)
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.