U.S. March natgas futures up slightly ahead of expiration

Tue Feb 26, 2013 9:09am EST

NEW YORK, Feb 26 (Reuters) - U.S. natural gas futures were
trading slightly higher early Tuesday, with the expiring March
contract underpinned by expectations that cold weather will
continue for the eastern half of the nation well into next
month.
    Front-month gas prices rallied 5.2 percent in the previous
two sessions, but traders said prices at current levels were
still cheap enough to draw support from some utilities switching
away from more expensive coal for power generation.
    In addition, they noted that hefty nuclear plant outages
this week, running between 15,000 and 16,000 megawatts, were
also boosting demand for gas. Gas-fired units are typically used
to offset shut nuclear generation. 
    At 9 a.m. EST (1400 GMT), front-month March gas futures
 on the New York Mercantile Exchange, which expire later
today, were up 1.3 cents at $3.427 per million British thermal
units, after trading between $3.394 and $3.455.
    Technical traders noted the nearby contract on Monday gapped
higher on the open and closed above near resistance at the
40-day moving average in the $3.33 area. Most agreed a strong
finish today could set the stage for more upside.
    Commodity Weather Group, a forecaster, still expects a
cold-prevailing pattern to continue through most of March, which
should translate into decent heating demand at the end of
winter.
    But even if March turns out cold, most traders see only
limited upside potential for prices, with gas inventories still
high, production flowing at or near an all-time peak and milder
spring weather only several weeks away.
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