UPDATE 3-Profit taking pressures US natgas futures after recent run
* Aggregate inventories remain high, weigh on prices * Front-month close below $3.50 possible bearish sign * Coming up: EIA, Enerdata natgas storage data Thursday By Joe Silha NEW YORK, March 6 (Reuters) - Front U.S. natural gas futures, shrugging off colder U.S. weather forecasts in mid-March and bullish inventory expectations, ended lower on Wednesday, pressured by profit taking after posting a six-week high in the previous session. Technical traders said the market was due for a pullback after moving into overbought territory during Tuesday's run up to a new recent high. Expectations for a bullish weekly storage report on Thursday and a major snowstorm slamming the Midwest and Mid-Atlantic may have kept some sellers cautious, but many traders remain skeptical of the upside, with winter winding down, storage still high and production flowing at or near a record peak. "There are milder temperatures coming later in the week, but this was probably profit taking ahead of Thursday's inventory report," said Steve Platt, analyst at Archer Financial. "The close below $3.50 (per million British thermal units) could put the market back on the defensive," Platt added. Front-month gas futures on the New York Mercantile Exchange ended down 5.9 cents, or 1.7 percent, at $3.47 per mmBtu, after trading between $3.462 and $3.55. The nearby contract, which on Monday settled above $3.50 for the first time in six weeks, hit a six-week high of $3.594 on Tuesday before closing unchanged for the day at $3.529. Cold late-winter weather had helped push the front contract up 12 percent in a little over two weeks and turned the chart picture more supportive, but some traders agreed that Wednesday's close below the closely-watched $3.50 support level could signal an end to the recent uptrend. After a milder weekend, MDA Weather Services noted that both the six-to-10-day and 11-to-15-day forecasts turned colder, with most of the eastern two-thirds of the nation likely to see normal or below-normal readings through the third week of March. ABOVE-AVERAGE STORAGE DRAW EXPECTED Traders and analysts were waiting for the next U.S. Energy Information Administration storage report on Thursday, with most expecting inventories to have fallen by 134 billion cubic feet last week, according to a Reuters poll. Traders said a draw of that size would be supportive, noting stocks fell by an adjusted 92 bcf during the same week last year, while the five-year average drop for that week is 107 bcf. Data last week from the EIA showed domestic gas inventories for the week that ended Feb. 22 had fallen to 2.229 trillion cubic feet, but storage is still relatively high at 308 bcf, or 16 percent, above the five-year average. Most analysts now expect storage to end the heating season below 2 tcf, or 13 percent above average but 21 percent below last winter's record-high finish of 2.48 tcf. OUTPUT STARTS TO SLOW? The Baker Hughes gas-directed drilling rig count has fallen in four of the last five weeks and is hovering just above the 13-1/2 year low hit in early November, but traders noted production remains high. EIA data last week showed that gross natural gas output in December slipped slightly from November's record high, but most analysts pegged the decline to cold weather in the Southwest that temporarily froze wells. The EIA expects marketed gas production in 2013 to hit a record high for the third straight year.
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