NEW YORK, Feb 25 Front-month U.S. natural gas
futures gained ground on Monday for a second straight session as
cold weather forecasts for the next two weeks continued to boost
prospects for heating demand.
Traders also said gas at current levels was still cheap
enough to draw support from some utilities opting to shun more
expensive coal for power generation.
Hefty nuclear plant outages this week, running at about
15,000 megawatts, were also boosting gas demand. Gas-fired units
are typically used to offset shut nuclear generation.
At 9:20 a.m. EST (1420 GMT), front-month March gas futures
on the New York Mercantile Exchange, which expire on
Tuesday, were up 11 cents, or 3.3 percent, at $3.401 per million
British thermal units, after trading between $3.32 and $3.422.
The front contract gained 4.4 percent last week.
Technical traders noted the nearby contract gapped higher on
the open and broke resistance at the 40-day moving average in
the $3.33 area, but most said they needed a strong close above
that level to predict more upside.
Commodity Weather Group, a forecaster, said a blocking
pattern will keep cold-prevailing weather through the
11-to-15-day time frame, with one computer model trending colder
for the second half of March, though not as cold as the first
But even if March turns out colder than normal, most traders
see only limited upside from here, with gas inventories still
high and production flowing at or near an all-time peak.
GAS DRILLING GAINS, OUTPUT FAILS TO SLOW
Baker Hughes data on Friday showed the gas-directed
drilling rig count rose last week for the first time in four
weeks, climbing by seven to 428.
The gas count is hovering not far above the 13-1/2 year low
of 413 hit in early November, but high production has shown no
significant signs of slowing.
Early withdrawal estimates for Thursday's inventory report
range from 120 bcf to 171 bcf. That would be above the 106 bcf
pulled from storage during the same week in 2012 and above the
five-year average decline for that week of 118 bcf.
If drawdowns for the rest of winter match the five-year
average, inventories will end March at 2.089 tcf, about 21
percent above normal but 16 percent below last year, when stocks
finished a very mild heating season at a record-high 2.48 tcf.