UPDATE 3-U.S. natgas futures end down for 3rd day, break support
* Front month off for 3rd day, just breaks trendline support * Moderating weather forecasts weigh on sentiment * Stock-building season off to a slow start * Coming Up: EIA, Enerdata natgas storage data Thursday By Joe Silha NEW YORK, April 24 (Reuters) - U.S. natural gas futures ended lower on Wednesday for a third straight session, with the front month closing slightly below trendline support as milder weather forecasts and technical selling drove prices down from recent highs. Cold late-winter weather, a chilly spring and above-average nuclear plant outages put a huge dent in record gas inventories and helped drive prices up 40 percent since mid-February. But despite lingering cold and prospects for light storage builds for the next two weeks, some see the upside for gas futures stalling after nine straight weeks of gains, particularly with milder weather on the horizon. "The heating season seems to be concluding. There's not enough cold in northern latitudes to drive much consumption and support prices, so I think we could break down a little further," said Richard Hastings, macro strategist at Global Hunter Securities. Front-month gas futures on the New York Mercantile Exchange, which expire on Friday, ended down 7.2 cents, or 1.7 percent, at $4.166 per million British thermal units after trading between $4.162 and $4.276. The front contract is down 5.5 percent in the last three sessions after hitting a 21-month high of $4.429 on Thursday. Chart watchers said Wednesday's front month close just below the up trendline in the $4.18 area could be a bearish sign and set up a test of better support in the $4.13 area, the 20-day moving average and the 23.6 Fibonacci retracement of the move up from the $3.125 February low to last week's peak. Matt Smith, commodity analyst at Schneider Electric, pegged major support in the $3.93 area, which is the 38.2 Fibonacci measurement and the front-month high from last year. Some said a close below that level could herald the end of the bull market, at least until hotter weather kicks up air conditioning demand. After the cold shot this week, MDA Weather Services expects temperatures through the first week of May to range from seasonal to above seasonal for most of the eastern half of the nation, with below normal readings only in Gulf Coast states. ANOTHER LIGHT INVENTORY BUILD EXPECTED Traders and analysts polled by Reuters are looking for a 32 billion cubic feet build when the U.S. Energy Information Administration releases its weekly inventory report on Thursday. Stocks rose 43-bcf during the same week last year, while the five-year average build for that week is 50 bcf. It would only be the second injection of the stock building season, which started about three weeks later than usual this year due to chilly spring weather. EIA data last week showed total domestic gas inventories had climbed to 1.704 trillion cubic feet, 32 percent below last year's record highs at that time and 4 percent below the five-year average. Chilly weather this month is expected to slow inventory builds in at least the next two reports and drive stocks further into deficit relative to the five-year average. OUTPUT NOT SLOWING MUCH YET Baker Hughes data on Friday showed the gas-directed rig count rose slightly last week for the second straight week, stirring expectations that higher gas prices may be tempting producers to hook up more wells. While the gas rig count is hovering just above a 14-year low of 375 posted two weeks ago, production so far has not slowed much, if at all, from the record high hit last year.
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