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