REFILE-UPDATE 3-EIA draw, weather drive U.S. natgas futures up 4 pct, front hits 6-mth high
(Refiles to add dropped word "November" in first paragraph)
* Futures soar after bullish weekly inventory report
* Much colder weather next week should stoke demand
* Record production, comfortable storage tempers gains
* Coming up: EIA gross gas production data, Baker Hughes rig data Friday
By Joe Silha
NEW YORK, Dec 5 (Reuters) - U.S. natural gas futures broke a two-day losing streak and ended up sharply on Thursday, as chilly forecasts and government data showing a record weekly inventory draw for November combined to drive the front contract to a six-month high.
The U.S. Energy Information Administration reported that total gas inventories fell last week by 162 billion cubic feet to 3.614 trillion cubic feet.
Most traders viewed the drop as bullish for prices, noting it came in well above the Reuters poll estimate of 138 bcf and also exceeded the highest estimate of 154 bcf in that poll.
It was the biggest weekly inventory draw for any week in November, according to EIA data going back to 1994.
Stocks fell 62 bcf during the same year-ago week, and the five-year average decline for that week is just 41 bcf.
"It was cold last week and not just in one region. Big cities in the Midwest, South and East were very cold, but I think all the good (bullish) news is priced in, and any change in the forecast should bring out the sellers," an independent trader in Massachusetts said.
Front-month gas futures on the New York Mercantile Exchange ended up 17.2 cents, or 4.3 percent, at $4.132 per million British thermal units and climbed late to a fresh six-month high of $4.144.
Chilly weather in November helped drive the front month contract up 12.6 percent in the four weeks ended Friday, but gains stalled earlier this week as investors took profits ahead of the storage report. Bullish inventory data and a winter storm sweeping across the country brought buyers back again.
Severe cold weather was forecast across most of the country, except the East Coast, for the next five days, with lower-than-average temperatures stretching over the next 10 days, according to private forecaster MDA Weather Services. MDA forecasts milder temperatures in the 11-to-15-day period.
Chart traders agreed the strong front-month close today above $4 could set the stage for more upside even though the contract is technically very overbought.
But with stockpiles at comfortable levels and production flowing at a record-high pace, some traders remained skeptical about further gains unless frigid weather is sustained.
The weekly gas storage draw sharply widened the deficit relative to last year by 100 bcf to 200 bcf, or 5.2 percent below last year's record highs at that time. It also wiped out the 17 bcf surplus versus the five-year average, leaving stocks 104 bcf, or 2.8 percent, below that benchmark.
Early withdrawal estimates for next week's storage report range from 75 bcf to 86 bcf. That would compare to an 8 bcf drop during the same year-ago week and a five-year average decline of 76 bcf for that week.
Traders were waiting for the next Baker Hughes drilling rig report on Friday. Despite recent gas rig count declines, production has not showed any signs of slowing. The EIA expects U.S. gas production in 2013 to reach a record high for the third straight year, then climb again in 2014.
In the ICE cash market, prices for Friday delivery at Henry Hub GT-HH-IDX, the benchmark supply point in Louisiana, were up 10 cents at $3.98, with late differentials slightly firmer at 10 cents under NYMEX from an 11-cent discount on Wednesday.
Gas on the Transco pipeline at the New York citygate E-TSCO6NY-IDX climbed 12 cents to $3.96 on the colder late-week outlook. Chicago MC-CHICIT-IDX was 14 cents higher at $4.27.
For daily ICE U.S. cash gas prices, click <0#GAS-IDX=ICE>. (Additonal reporting by Julia Edwards and Eileen Houlihan; Editing by James Dalgleish and Meredith Mazzilli)
- Malaysia military source says missing jet veered to west |
- Ukraine appeals to West as Crimea turns to Russia |
- Malaysia air probe finds scant evidence of attack: sources |
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source
- Libyan parliament sacks PM after tanker escapes rebel-held port