U.S. natgas futures climb for 2nd day, forecasts turn colder
NEW YORK, Feb 25 (Reuters) - Front-month U.S. natural gas futures gained ground on Monday for a second straight session as cold weather forecasts for the next two weeks continued to boost prospects for heating demand. Traders also said gas at current levels was still cheap enough to draw support from some utilities opting to shun more expensive coal for power generation. Hefty nuclear plant outages this week, running at about 15,000 megawatts, were also boosting gas demand. Gas-fired units are typically used to offset shut nuclear generation. At 9:20 a.m. EST (1420 GMT), front-month March gas futures on the New York Mercantile Exchange, which expire on Tuesday, were up 11 cents, or 3.3 percent, at $3.401 per million British thermal units, after trading between $3.32 and $3.422. The front contract gained 4.4 percent last week. Technical traders noted the nearby contract gapped higher on the open and broke resistance at the 40-day moving average in the $3.33 area, but most said they needed a strong close above that level to predict more upside. Commodity Weather Group, a forecaster, said a blocking pattern will keep cold-prevailing weather through the 11-to-15-day time frame, with one computer model trending colder for the second half of March, though not as cold as the first half. But even if March turns out colder than normal, most traders see only limited upside from here, with gas inventories still high and production flowing at or near an all-time peak. GAS DRILLING GAINS, OUTPUT FAILS TO SLOW Baker Hughes data on Friday showed the gas-directed drilling rig count rose last week for the first time in four weeks, climbing by seven to 428. The gas count is hovering not far above the 13-1/2 year low of 413 hit in early November, but high production has shown no significant signs of slowing. Early withdrawal estimates for Thursday's inventory report range from 120 bcf to 171 bcf. That would be above the 106 bcf pulled from storage during the same week in 2012 and above the five-year average decline for that week of 118 bcf. If drawdowns for the rest of winter match the five-year average, inventories will end March at 2.089 tcf, about 21 percent above normal but 16 percent below last year, when stocks finished a very mild heating season at a record-high 2.48 tcf.