UPDATE 2-U.S. natgas futures rise on forecast for winter storm

Thu Jan 2, 2014 3:26pm EST

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(Adds quote, drawdown estimates)

NEW YORK Jan 2 (Reuters) - U.S. natural gas futures were up on the first day of trading in 2014 on Thursday, reversing Tuesday's losses, on short-term forecasts for extreme cold temperatures and a snow storm headed to the U.S. Northeast from the Midwest.

Private forecaster MDA Weather Services called for cold, stormy weather to continue in the 1- to 5-day range, but moderated temperatures are expected in the 6- to 10-day range, followed by strong warmth in the East in the 11- to 15-day forecast.

"This forecast should result in an above normal level of heating demand which should result in the total inventory gap widening versus last year and the five-year average," said Dominick Chirichella, a partner at the Energy Management Institute. "On the other hand, the eight- to fourteen-day forecast is decidedly less supportive."

Chilly early winter weather has helped drive the front month up more than 25 percent since Nov. 1, with the contract posting a 2-1/2-year high of $4.532 on Dec. 23.

Front-month February gas futures on the New York Mercantile Exchange, settled up 9.1 cents, or 2.2 percent, at $4.321 per million British thermal units. The day's trade ranged between $4.213 and $4.331.

In the ICE cash market, prices for Friday delivery at Henry Hub GT-HH-IDX, the benchmark supply point in Louisiana, dipped 1 cent to $4.33, with late trade differentials weakening to less than 1 cent over NYMEX, down from an 11 cent premium on Tuesday.

Gas on the Transco pipeline at the New York citygate E-TSCO6NY-IDX jumped $15.72 to $31.12 as cold temperatures and a winter storm expected to hit the northeast region Thursday night caused some pipelines to reach capacity.

(For daily ICE U.S. cash gas prices, click <0#GAS-IDX=ICE>)

Analysts polled by Reuters expected to see a drawdown of 126 billion cubic feet of gas reserves in this week's storage data for the week ended Dec. 27, due Friday at 10:30 EST a.m. (1530 GMT).

The Reuters poll had 20 participants, with withdrawal estimates ranging from 103 bcf to 162 bcf. The median draw in the poll was 125 bcf.

Stocks fell by a date-adjusted 126 bcf during the same week in 2012. The five-year average draw for that week is 121 bcf.

Data released last Friday by the U.S. Energy Information Administration showed that total gas inventories fell the week ending on December 20 by 177 billion cubic feet to 3.071 trillion cubic feet. The report was delayed one day last week by the Christmas holiday.

Nuclear plant outages on Thursday totaled 1,600 megawatts, or about 2 percent of U.S. capacity. That was down from Tuesday's total of 1,750 MW, and well below the 8,400 MW out a year ago and the five-year average outage rate of 4,600 MW. (Reporting by Julia Edwards; Editing by Bernadette Baum and Meredith Mazzilli)

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