* Front month well above recent 3-month spot low
* Colder weather on tap for consuming regions
* Record high production should limit upside
By Eileen Houlihan
NEW YORK, Jan 14 U.S. natural gas futures rose
about 2 percent early on Monday, boosted for a third straight
session by colder weather expected in consuming regions of the
nation starting this week.
Last week's much larger-than-expected inventory drawdown -
the biggest in about two years - also kept momentum to the
upside, traders said.
As of 9:13 a.m. EST (1413 GMT), front-month February gas
futures on the New York Mercantile Exchange were at
$3.391 per million British thermal units, up 6.4 cents, or just
under 2 percent.
The front month fell to $3.05 in early January, a contract
low and the lowest mark for a spot contract since late
The latest National Weather Service six-to-10-day forecast
issued on Sunday called for below-normal temperatures for a
little more than the eastern half of the nation, but
above-normal readings in the West.
BIG STORAGE DRAW BUT STOCKS ABOVE AVERAGE
Last week's gas storage report from the U.S. Energy
Information Administration showed inventories fell in the prior
week by 201 billion cubic feet, above industry expectations for
a 186-bcf draw.
The decline easily beat last heating season's peak draw of
192 bcf during the week ended Jan. 20, 2012, and may reflect
some permanent underlying growth in demand this year as
utilities switch from coal to cheaper gas for power generation.
Despite the large draw, storage remains at 3.316 trillion
cubic feet, about 3 percent below year-ago levels but nearly 11
percent above the five-year average.
(Storage graphic: link.reuters.com/mut84t)
Inventories started the heating season in early November at
3.929 tcf, the fourth straight year in which inventories have
headed into the heating season at an all-time peak.
Early withdrawal estimates for this week's storage report
range from 100 bcf to 143 bcf, well above the 89 bcf pulled from
inventories during the same week last year, but below the
five-year average decline for that week of 144 bcf.
RIGS SLIDE BUT OUTPUT NEAR RECORD
Baker Hughes data on Friday showed the gas-directed rig
count fell by five to 434, its first drop in four weeks.
Drilling for natural gas has mostly declined for more than a
year, with gas rigs down 54 percent since peaking at 936 in
(Rig graphic: r.reuters.com/dyb62s)
But the EIA said last week it expects gas output in 2013 to
rise to 69.84 bcf per day, the third straight annual record.
(Editing by Dale Hudson)