UPDATE 3-U.S. natural gas futures end up as colder weather nears
* Coal switching, nuclear plant outages lend support * High inventories, record production limit price gains * Coming up: EIA, Enerdata natgas storage reports Thursday By Joe Silha NEW YORK, Feb 13 (Reuters) - U.S. natural gas futures ended higher on Wednesday as bullish expectations for Thursday's weekly inventory report and colder weather forecasts for the next two weeks underpinned buying. Gas prices this year have mostly been stuck in a trading range between $3.20 and $3.60, but recent tests of support have held and may continue to do so if Northeast and Midwest temperatures turn colder later this week and kick up demand for gas to heat homes and businesses. "A lot of the buying had to do with the temperature outlook which looks pretty cold, but the market is still range-bound," said Aaron Calder, analyst at Gelber & Associates in Houston. Front-month gas futures on the New York Mercantile Exchange ended up 7.6 cents, or 2.4 percent, at $3.306 per million British thermal units, after trading in a range between $3.23 and $3.323. Traders also noted that current gas prices were low enough to prompt utilities to switch from coal to gas to generate power, while hefty nuclear plant outages this week of more than 13,000 megawatts could boost gas demand further. Gas-fired units are typically used to offset any shut nuclear generation. After a fairly mild week this week, MDA Weather Services sees temperatures in the West mostly averaging below normal for the next two weeks, while the eastern half of the nation will see mostly seasonal readings during that period. Despite the colder outlook, many traders remained skeptical of any upside in prices with winter winding down, inventories still high and production flowing at or near an all-time peak. ABOVE AVERAGE STORAGE DRAW EXPECTED Traders and analyst polled by Reuters expect inventories to have fallen by 162 billion cubic feet last week when the U.S. Energy Information Administration releases its weekly storage report on Thursday. Stocks fell by an adjusted 113 bcf during the same week last year, while the five-year average draw for that week is 154 bcf. EIA data last week showed total gas inventories of 2.684 trillion cubic feet had dropped 8 percent below last year's record highs at that time, but were still relatively high at 351 bcf, or 15 percent, above the five-year average. If withdrawals for the rest of winter match the five-year average, stocks will end March at 2.079 tcf, about 20 percent above normal but 16 percent below last year, when inventories finished a very mild heating season at a record high 2.48 tcf. DRILLING DECLINES, PRODUCTION FAILS TO SLOW While the Baker Hughes gas-directed rig count has fallen in four of the last five weeks and is hovering not far above a 13-1/2 year low hit three months ago, production has shown no significant signs of slowing. In its short-term energy outlook on Tuesday, EIA said that it expected marketed gas production to climb 1.1 percent this year to 70.02 bcf per day, the third straight annual record. The agency expects gas consumption in 2013 to gain 1.2 percent.
- U.S. Mega Millions lottery up to $400 million, 2nd-biggest ever
- Pope Francis named Time's Person of the Year |
- Uruguay becomes first country to legalize marijuana trade
- Thousands of South Africans line up to see Mandela lie in state |
- China bitcoin arbitrage ends as traders work around capital controls