UPDATE 3-Front U.S. natgas futures end down, 1st loss in 4 days

Wed May 22, 2013 3:57pm EDT

* Cool near-term forecasts pressure front-month prices
    * Warmer extended weather outlook limits downside
    * Coming up: EIA, Enerdata natural gas storage data Thursday


    By Joe Silha
    NEW YORK, May 22 (Reuters) - Front-month U.S. natural gas
futures closed lower on Wednesday for the first time in four
sessions, as prices pulled back ahead of Thursday's inventory
report and in the face of cooler weather heading into a holiday
weekend that should slow demand.
    Offices for most trading firms will be closed on Monday for
the U.S. Memorial Day holiday.
    Traders said the market was due for a pullback after rising
nearly 7 percent in the previous three sessions.
    "The market has been range trading. Next week looks like
there may be some moderate cooling demand, but it might not be
enough to kick prices up significantly," said Jonathan Lee at
Ecova Inc in Spokane, Washington.
    Front-month gas futures on the New York Mercantile
Exchange ended down 0.6 cent at $4.186 per million British
thermal units after trading between $4.155 and $4.228. The front
contract is still up 3.2 percent so far this week.    
    Ecova's Lee said profit taking ahead of the U.S. Energy
Information Administration's weekly storage report on Thursday
might also have pressured front-month prices.
    Traders and analysts polled by Reuters are expecting to see
that total gas stocks rose 91 billion cubic feet last week. That
would be well above the 75 bcf injection during the same week
last year, but nearly flat with the 90-bcf five-year average
increase for that week. 

    Inventory builds have exceeded market expectations for three
straight weeks as mild May weather slowed overall demand.
    Chart traders agreed the market seemed well supported in the
low-$3.90s after testing and holding that area several times
last week. But with supplies still comfortable, many traders
remain skeptical of the upside, at least until a broader-based
heat wave forces more air conditioning loads.
    Seasonal or below seasonal temperatures are expected for the
eastern half of the nation for the next five days, but Commodity
Weather Group noted the first week of June turned hotter for the
Midwest and East, with heat also spilling into the South.    
    Traders noted that deep deferred futures finished with
modest gains, with 2018 contracts ending about 3 cents higher.
Back months have mostly outperformed over the last few days
following news on Friday that the U.S. Energy Department
approved natural gas exports from Freeport LNG's Texas terminal.
    Despite a steep decline in dry gas drilling over the last
year and a half, production has not slowed much, if at all. The
Energy Information Administration still expects output in 2013
to post a record high for a third straight year.
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