U.S. natgas futures edge lower after 19-mth high, pre-EIAs

Thu Mar 28, 2013 9:34am EDT

* Front month hits highest mark since early September 2011
    * More cold weather on tap in long-term forecasts
    * Nuclear outages back below last year, five-year levels

    By Eileen Houlihan
    NEW YORK, March 28 (Reuters) - U.S. natural gas futures slid
early on Thursday, after climbing to their highest mark in 19
months amid lingering cold weather and ahead of government
storage data expected to show another large withdrawal from
inventories.
    Traders and analysts expect weekly data from the U.S. Energy
Information Administration to show a draw of about 87 billion
cubic feet when it is released at 10:30 a.m. EDT (1430 GMT), a
Reuters poll showed. 
    Stocks rose an adjusted 45 bcf during the same week last
year, and on average over the past five years have gained 6 bcf
for the week ended March 22.
    Traders said the market could be consolidating in some
profit taking after the nearby contract rose to its highest
level since early September 2011.
    Late-winter cold has put a huge dent in inventories and
helped drive gas futures up about $1 per million British thermal
unit, or more than 30 percent, since mid-February.
    Above-normal nuclear power plant outages have also increased
demand for gas-fired replacement power and underpinned price
gains.
    But some traders said gas was due for a pullback, with
winter-like weather expected to wind down soon and nuclear
outages returning to below average levels.
    As of 9:13 a.m. EDT (1313 GMT), front-month May natural gas
futures on the New York Mercantile Exchange were at
$4.045 per mmBtu, down 2.3 cents, or less than 1 percent, after
rising to as high as $4.121 in electronic trade.
    Despite some moderating weather in the Northeast late this
week, the latest National Weather Service six to 10-day forecast
issued on Wednesday again called for below-normal readings in a
little more than the eastern half of the nation and above-normal
readings in the West.
    But nuclear outages totaled 18,400 megawatts, or 18 percent
of U.S. capacity, down from 21,800 MW out on Wednesday, 20,700
MW out a year ago and a five-year average outage rate of 19,200
MW. 
    
    INVENTORY DRAW FALLS SHORT OF EXPECTATIONS
    Last week's EIA storage report showed total domestic gas
inventories fell in the prior week by 62 billion cubic feet,
below Reuters poll estimates for a 70 bcf draw. 
    It was the first time in five weeks that the weekly draw
fell short of expectations.
    Domestic gas inventories are now at 1.876 trillion cubic
feet, more than 21 percent below last year's record high for
this time of year but about 10 percent above the five-year
average.

    Stocks seem on track to end the heating season below 1.8
tcf, or just 3 percent above average. A Reuters poll in
mid-January showed most analysts expected stocks to finish the
winter at about 2 tcf.
    Baker Hughes data last week showed the gas-directed
drilling rig count fell by 13 to 418, hovering just above the
recent 14-year low of 407 posted three weeks ago.
 

    While the EIA recently 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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