U.S. natgas futures slip early, milder forecast limits buying

Tue Jun 25, 2013 9:24am EDT

NEW YORK, June 25 (Reuters) - U.S. natural gas futures
slipped slightly early Tuesday, as milder forecasts for later
this week and next week that should slow demand outweighed heat
in the Northeast and Midwest early in the week.
    Front-month gas futures have lost nearly 6 percent in the
previous three trading sessions amid signs that the extended
weather outlook was trending milder. It was the biggest
three-day slide for the near month in seven weeks.    
    At 9:15 a.m. EDT (1315 GMT), front-month July gas futures
 on the New York Mercantile Exchange, which expire on
Wednesday, were down 1.5 cents at $3.724 per million British
thermal units after trading between $3.718 and $3.76. The front
contract posted a three-month low of $3.71 two weeks ago.
    "Prices have dropped below $3.75 for a second time this
month as the market searches for a bottom, but growing cooling
demand and hurricane season risk should provide support in the
coming weeks," Addison Armstrong, senior director of market
research at Tradition Energy, said in a report.
    The front month eked out a small gain last week, its first
after sinking 12 percent in the previous three weeks, but many
traders remained skeptical of the upside without a sustained,
broad-based heatwave, particularly with inventories comfortable
and gas production still flowing at or near a record high.
    While heat is forecast to continue in the West for the next
two weeks, MDA Weather Services expects near seasonal or below
seasonal temperatures to dominate the eastern half of the nation
during the six-to-15-day time frame.
    The Baker Hughes gas drilling rig count fell to
another 18-year low last week, but U.S. gas production has not
slowed much, if at all this year.

    The Energy Information Administration still expects gas
output in 2013 to post a record high for a third year.
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