* New front month contract remains above recent 3-month low
* Colder weather set to return to Midwest this week
* Above-normal nuclear outages lend some support
By Eileen Houlihan
NEW YORK, Jan 30 U.S. natural gas futures edged
higher early Wednesday, rising for the first time in seven
sessions ahead of colder weather expected to make a return to
Midwest consuming regions later this week.
But with milder weather on tap for extended weather
outlooks, and above-normal inventory levels, most traders expect
As of 9:16 a.m. EST (1416 GMT), new front-month March
natural gas futures on the New York Mercantile Exchange,
were at $3.284 per million British thermal units, up 2.6 cents,
or just under 1 percent.
The February contract went off the board on Tuesday down 6.3
cents, or nearly 2 percent, after sliding more than 9 percent in
the past six sessions, the biggest six-day slide in nearly seven
The former front month hit a 6-1/2-week high of $3.645 early
last week and a more than three-month low of $3.05 in early
Forecaster MDA Weather Services said cold would return to
the Midwest in the one to five-day outlook, but a shift to
above-normal or far-above-normal temperatures were expected for
much of the country in the six to 10-day outlook.
The latest National Weather Service six to 10-day forecast
issued on Tuesday also called for above-normal readings for most
of the nation with near-normal temperatures along both coasts.
Nuclear outages totaled 7,100 megawatts, or 7 percent of
U.S. capacity, down from 7,700 MW out on Tuesday and 9,800 MW a
year ago, but up from a five-year average outage rate of about
BIG STORAGE DRAWS FAIL TO FIRM PRICES
Last week's gas storage report from the U.S. Energy
Information Administration showed domestic gas inventories fell
in the prior week by 172 billion cubic feet, above industry
expectations for a 167 bcf draw.
Most traders viewed the decline as supportive, noting it was
the fourth straight week that declines topped industry
Traders said the recent larger-than-expected inventory draws
could be reflecting new growth in gas use this year as utilities
switch from coal to cheaper gas for power generation.
But despite the large withdrawals, storage remains at 2.996
trillion cubic feet, about 5 percent below year-earlier levels,
but 12 percent above the five-year average.
Early withdrawal estimates for Thursday's weekly inventory
report range from 197 bcf to 221 bcf, well above the 149 bcf
drawn from inventory during the same week last year and the
five-year average decline of 178 bcf for that week.
If drawdowns for the rest of the winter match the five-year
average, inventories will end March at 2.048 tcf, about 18
percent above normal but 17 percent below last year, when stocks
finished a very mild heating season at a record-high 2.48 tcf.
GAS RIG COUNT GAINS, FIRST TIME IN THREE WEEKS
Baker Hughes data last week showed the gas-directed
drilling rig count gained for the first time in three weeks,
rising by five to 434.
Drilling for natural gas has mostly been in decline for more
than a year, with the rig count not far above the 13-1/2-year
low of 413 posted in early November. But so far production has
shown no significant sign of slowing.
The EIA estimates that gas output in 2013 will hit a record
high for the third straight year.