U.S. natgas futures edge up early, cold outlook lends support

Fri Nov 15, 2013 9:36am EST

NEW YORK, Nov 15 (Reuters) - U.S. natural gas futures edged
higher early Friday in seesaw trade, as investors shrugged off
mild weekend weather forecasts and focused instead on the colder
temperature outlook for next week that should stir more heating
demand.
    After a brief, late-week warm-up in the Northeast and
Midwest, Commodity Weather Group noted that the six-to-15-day
forecast remained variable, but cool temperatures were still
expected across much of the East and South.    
    While that should lift demand for space heating, many
traders see only limited upside potential for prices until
colder weather is sustained, with stockpiles comfortable and
production flowing at a record-high pace.
    At 9:25 a.m. EST (1425 GMT), front-month gas futures 
on the New York Mercantile Exchange were up 2.5 cents at $3.63
per million British thermal units, after trading between $3.575
and $3.633.
    The nearby contract, which eked out a 1.3 percent gain last
week in its first weekly rise in four weeks, is up about 2
percent so far this week.
    Many traders viewed Thursday's 20-billion-cubic-foot weekly
natural gas inventory build reported by the U.S. Energy
Information Administration as neutral for prices.
    But they noted that total domestic gas inventories of 3.834
trillion cubic feet were just 2 percent below last year's record
highs at that time and 1.5 percent above the five-year average.
 
    That build should be the last of season, with early
withdrawal estimates for next week's storage report ranging 
from 15 bcf to 41 bcf. That would compare with the 36 bcf draw
of a year earlier and the five-year average decline of 2 bcf for
that week.             
       
    Traders were waiting for the next Baker Hughes 
drilling rig report on Friday. The gas rig count has risen in 12
of the last 20 weeks, stirring talk that new pipelines and
processing plants may be encouraging producers to hook up more
wells and pump more gas into an already well-supplied market.   
    The EIA on Wednesday raised its estimate for domestic
natural gas production in 2014, expecting output to be up more
than 1 percent from 2013's record-high levels. 
    Nuclear plant outages on Friday totaled 11,202 megawatts, or
about 11 percent of U.S. capacity. That was up from Thursday's
total of 9,857 MW but well below the 25,718 MW out one year ago
and the five-year average outage rate of 17,984 MW.
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