U.S. natgas futures rise 2 pct to 3-1/2-mth spot high

Fri Mar 15, 2013 9:29am EDT

* Front month at highest mark since late November
    * Nuclear outages still running above normal
    * Cold weather back on tap on longer-term outlooks
    * Coming Up: Baker Hughes gas drilling rig data on Friday

    By Eileen Houlihan
    NEW YORK, March 15 (Reuters) - U.S. natural gas futures rose
more than 2 percent early Friday to a 3-1/2-month spot chart
high amid continued follow-through from Thursday's supportive
weekly storage data and forecasts for more cold weather in
consuming regions next week.
    In addition, above-average nuclear power plant outages also
help keep momentum to the upside.
    Most traders agreed the chart picture remained supportive
after the front-month contract broke through several key
resistance levels on its 25-percent run up from a five-week low
of $3.125 per million British thermal units hit in mid-February.
    But some cautioned that the impending end of winter could
provide resistance to higher prices.
    As of 9:23 a.m. EDT (1323 GMT), front-month April natural
gas futures on the New York Mercantile Exchange were at
$3.881 per mmBtu, up 6.9 cents, or nearly 2 percent.
    The front-month rose as high as $3.897 in electronic trade,
the highest mark for a spot contract since late November,
according to Reuters data.
    Forecaster MDA Weather Services called for cold weather in
northern-tier states in its one to five-day outlook.
    The latest National Weather Service six to 10-day forecast
issued on Thursday called for below-normal temperatures for much
of the United States, with above-normal readings in the
Southeast stretching into south Texas.
    Nuclear outages totaled 18,300 megawatts, or 18 percent of
U.S. capacity, up from 17,400 MW out on Thursday and a five-year
average outage rate of about 16,700 MW, but down from 19,600 MW
out a year ago. 
    
    ANOTHER ABOVE-AVERAGE STORAGE DRAW
    U.S. Energy Information Administration data on Thursday
showed storage fell 145 billion cubic feet last week, above
Reuters poll expectations for a 134 bcf draw, the year-ago drop
of 66 bcf and the five-year average decline for that week of 74
bcf. 
    It was the fourth straight larger-than-expected drawdown
from inventories.
    The data showed domestic gas inventories are now at 1.938
trillion cubic feet, nearly 19 percent below last year's record
high levels for this time of year, but about 11 percent above
the five-year average level. 

    A string of strong weekly withdrawals has prompted analysts
to sharply lower estimates for end-winter storage, with some
expecting inventories to drop to as low as 1.8 tcf, or about 4
percent above average.
    A Reuters poll in mid-January showed most analysts had
expected stocks to finish the heating season at about 2 tcf.
    Early withdrawal estimates for next week's EIA storage
report range from 48 bcf to 69 bcf, versus a flat year-ago week
and a five-year average withdrawal of 26 bcf for that week.
    Traders were waiting for the next Baker Hughes gas
drilling rig report to be released later on Friday. Data last
week showed the gas-directed rig count fell 13 to a nearly
14-year low of 407. 
    It was the fifth drop in six weeks, but production has not
slowed much, if at all, from the record high posted last year.

    While the EIA on Tuesday lowered its growth forecast for
2013, it still expects marketed gas production to hit a record
high for the third straight year.
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