Front U.S. natgas futures edge up for 4th day, backed by cold

Wed Feb 27, 2013 9:25am EST

NEW YORK, Feb 27 (Reuters) - Front U.S. natural gas futures
edged higher early Wednesday for a fourth straight session amid
expectations that chilly weather forecasts for much of the
nation for the next two weeks will force more homeowners and
businesses to turn up their heaters.
    The front contract has rallied 5.6 percent in the previous
three sessions, its biggest three-day run up in six weeks, but
traders said gas prices were still cheap enough to draw demand
from some utilities switching away from more expensive coal for
power generation.    
    In addition, they noted that hefty nuclear plant outages
this week, running more than 16,000 megawatts, were also
boosting demand for gas. Gas-fired units are typically used to
offset shut nuclear generation.    
    At 9:10 a.m. EST (1410 GMT), front-month gas futures 
on the New York Mercantile Exchange were up 2.9 cents at $3.485
per million British thermal units, after climbing this morning 
to a five week high of $3.492.
    Technical traders noted the nearby contract gapped higher
this week and on Wednesday traded above the next resistance
point at the 100-day moving average in the $3.46 area. Most
agreed a strong close above the $3.50 mark could set the stage
for a test of this year's high of $3.645 hit in late January.
    Commodity Weather Group, a forecaster, noted the outlook
through mid March still favors a cold-prevailing pattern,
particularly for the Midwest, which should translate into decent
heating demand as winter winds down.
    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 likely just a few weeks away.
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