* Front month hits fresh 10-year spot low
* Milder spring weather on tap for much of the nation
* U.S. crude futures slip in early trade
* Coming Up: EIA oil data Wednesday, EIA gas data Thursday
By Eileen Houlihan
NEW YORK, April 18 U.S. natural gas futures
edged slightly higher in early trade Wednesday, after sliding
overnight to their lowest mark in more than 10 years amid mild
spring weather and a growing supply glut.
Record-high supplies have pushed prices below the key $2 per
million British thermal unit level and are expected to continue
to weigh on sentiment, but some traders said the market was
oversold and due for bounce after losing 8 percent this month.
Front-month May natural gas futures on the New York
Mercantile Exchange were at $1.967 per mmBtu, up 1.6
cents, after sliding to $1.94, the lowest price for a front
month since January 2002.
U.S. Energy Information Administration data last week showed
total gas inventories rose to 2.487 trillion cubic feet,
remaining at record highs for this time of year and standing
nearly 56 percent above last year and about 59 percent above the
five-year average level.
(Storage graphic: link.reuters.com/mup44s)
Injection estimates for this week's EIA report range from 12
bcf to 41 bcf, with most in the mid-20s bcf. Stocks gained an
adjusted 42 bcf during the same week last year and on average
over the past fives years have risen 26 bcf that week.
If weekly stock builds through October match the five-year
average pace, inventories would top out at 4.595 tcf, or about
12 percent above peak estimated capacity of about 4.1 tcf.
That could sink prices later in the injection season if
storage caverns fill up and force more gas into a well-supplied
PRODUCTION ALSO NEAR RECORD HIGHS
The EIA's short-term energy outlook last week also offered
little hope for bulls, with the agency sharply raising its
estimate for marketed gas production this year for a third
EIA said it expects 2012 gas output to climb by 3 bcf per
day, or 4.5 percent, to a record 69.22 bcfd, up from its March
outlook that had output this year at 67.91 bcf daily.
EIA also forecast a significant 2.8 bcf per day, or 4.3
percent, gain in consumption this year, primarily due to more
utilities switching from pricier coal to cheaper gas, but it was
not expected to be enough to tighten an over supplied gas
Production growth is expected to slow this year as low
prices hit plans for new drilling, but the sharp decline in the
Baker Hughes gas rig count -- down a third since peaking at 936
in October -- has not yet reduced output partly due to increased
The gas-directed rig count has fallen in 13 of the last 14
weeks, sinking on Friday to its lowest level in 10 years, but
rising output from shale has kept production on an upward track.
(Rig graphic: r.reuters.com/dyb62s)
The National Weather Service's six- to 10-day outlook issued
on Tuesday again called for above-normal readings for much of
the mid-Continent and below-normal readings mostly in the
eastern third of the nation.
Spring nuclear power plant outages were running at about
25,700 megawatts, or 25 percent, on Wednesday, down from about
28,900 MW out a year ago and a five-year outage rate of about
Traders said the outages should add more than 1 bcf to daily
(Reporting by Eileen Houlihan;editing by Sofina Mirza-Reid)