UPDATE 1-U.S. natural gas futures slip early as forecasts trend cooler

Fri Jun 14, 2013 10:11am EDT

* Weather forecasts stay moderate for eastern half of U.S.
    * Strong storage builds, high production also weigh
    * Coming up: Baker Hughes rig data, CFTC trade data Friday


    NEW YORK, June 14 (Reuters) - U.S. natural gas futures were
lower on Friday after climbing in the two previous sessions,
pressured by a cooler trend in U.S. weather forecasts that
should allow homeowners and businesses to turn down their air
conditioners.
    Gas prices have been struggling for the last few weeks in
the face of fairly mild late-spring weather.
    The front-month gas futures contract is down about 1.7
percent so far this week following a nearly 10 percent drop in
the previous two weeks. 
    With no extreme heat forecast for at least the next two
weeks in key population centers of the Midwest and East, few
traders expect much upside, particularly with more hefty storage
builds expected in coming weeks and production still flowing at
or near a record high.
    At 10 a.m. EDT (1400 GMT), front-month gas futures on
the New York Mercantile Exchange were down 5 cents, or 1.3
percent, at $3.764 per million British thermal units after
trading between $3.758 and $3.831. The front month briefly
dipped to a three-month low of $3.71 on Wednesday.
    Early cash quotes for weekend delivery at Henry Hub , the benchmark supply point in Louisiana, were up 4
cents at $3.77 on light volume of about 415 million cubic feet.
    Early Hub differentials firmed to about 2 cents under NYMEX,
from a 10-cent discount on Thursday.
    Prices on Transco pipeline at the New York citygate fell 8 cents to $3.64 on the mild late-week outlook,
but volume was very light at about 18 mmcf.
    Many traders viewed Thursday's report of an inventory build
of 95 billion cubic feet last week as neutral for prices, noting
it was in line with the Reuters poll estimate of 96 bcf.
    But some saw it as bearish, coming in well above the
five-year average increase for that week of 84 bcf.
 
    Early injection estimates for next week's Energy Information
Administration storage report range from 83 bcf to 95 bcf,
versus a 63-bcf build during the same week last year and a
five-year average rise for that week of 80 bcf.    
    The EIA's Thursday report showed total domestic gas
inventories rose last week to 2.347 trillion cubic feet, 587
bcf, or 20 percent, below last year's record highs at that time,
and 58 bcf, or just 2 percent, below the five-year average for
that week. 

    Except for some modest heat in Texas and parts of the
Southwest, Commodity Weather Group expects temperatures for the
eastern half of the nation to remain near seasonal for the next
two weeks.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.