UPDATE 3-Front U.S. natgas futures up slightly, 4th straight gain

Tue Sep 17, 2013 4:04pm EDT

* Midwest expected to remain warm for next 10 days
    * Milder temperatures in the East and West
    * No immediate storm threats to U.S. Gulf gas output
    * Coming up: Reuters weekly natgas storage poll Wednesday


    By Joe Silha
    NEW YORK, Sept 17 (Reuters) - Front-month U.S. natural gas
futures ended higher for a fourth straight session on Tuesday,
backed by rising nuclear plant outages and bullish inventory
expectations, despite light profit taking after posting an
eight-week high early in the day.
    The front contract is up 5 percent in the last four
sessions, its biggest four-day winning streak since Aug. 22.
    "I think the recent buying is a combination of the nuke
outages, and maybe some people are looking for a supportive
inventory report on Thursday, but I'm skeptical about whether
the fundamentals are good enough to support prices up here,"
said Steve Platt, an analyst at Archer Financial in Chicago.
    Many traders agreed that recent gains have been underpinned
by seasonal maintenance at some of nuclear plants that have
shifted demand to gas. Gas-fired units are typically used to
make up any lost generation when nuclear plants shut.
    Warm weather, particularly in the Midwest, and expectations
for another supportive weekly inventory report on Thursday have
also triggered some buying. Traders said production shut ins
this week from flooding in Colorado were also likely to lower
next week's storage estimates. 
    Front-month gas futures on the New York Mercantile
Exchange ended up 0.7 cent at $3.745 per million British thermal
units, after rising early to $3.776, the highest for the nearby
contract since late July.    
    Technical traders said Friday's settle above the 200-day
moving average at $3.67 might have set the stage for another leg
higher, particularly after two more higher closes this week.
    They noted that a swing measurement of the previous leg up
from early August to early September could drive front futures
slightly above $4.00.
    But despite recent gains, some traders remained skeptical of
the upside, with inventories on the rise, production flowing at
or near a record peak, and summer heat and storm activity likely
to fade soon.
    Forecaster MDA Weather Services expects above normal
temperatures to linger in the Midwest for the next 10 days, but
readings in the East and West are expected to average normal or
below normal during the period.
    U.S. Energy Information Administration data last week showed
 total domestic gas inventories at 3.253 trillion cubic feet.
Stockpiles are about 5 percent below last year's record highs at
that time, but 1.4 percent above the five-year average. 
    Injection estimates for Thursday's EIA report range from 49
bcf to 64 bcf, with most in the high-50s. That would be below
the 61 bcf build seen during the same week last year and well
below the five-year average increase for that week of 74 bcf.
         
    Baker Hughes Inc data on Friday showed the
gas-directed rig count rose by seven last week to near a
six-month high of 401. It was the second weekly gain for the gas
rig count, which posted an 18-year low of 349 in late June.
 
    Recent gas rig count gains - the count has risen in eight of
the last 12 weeks - have stirred views that new investment in
gas pipelines and processing plants is allowing producers to
pump even more supply into an already well-supplied market. 
    The EIA still expects U.S. gas production in 2013 to hit a
record high for a third straight year.
    In the ICE cash market, gas for Wednesday delivery at Henry
Hub , the benchmark supply point in Louisiana, rose
13 cents to $3.77, with late Hub differentials firming to about
3 cents over NYMEX from about flat on Monday.
    Gas on the Transco pipeline at the New York citygate rose 17 cents to $3.95, while Chicago was 9
cents higher at $3.89.
    For daily ICE U.S. cash gas prices click on .
   
    The U.S. National Hurricane Center was monitoring two
tropical systems, one in the central Atlantic and one near
Mexico's Yucatan Peninsula, but traders said neither seemed
likely to significantly threaten Gulf of Mexico gas output.
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