* Late technical selling pressures futures prices
* Cold extended forecast should lift demand, limit downside
* Comfortable storage, record production weigh on sentiment
By Joe Silha
NEW YORK, Nov 18 U.S. natural gas futures
reversed course and ended lower for the first time in three
sessions on Monday, as early buying on cold weather forecasts
gave way to a late wave of technical selling and profit taking
"The weather forecasts looked more bullish today, but
traders might be eying technical resistance above $3.70 (per
mmBtu) and opting to get out of some of their long positions,"
said Aaron Calder, analyst at Gelber & Associates in Houston.
Calder noted the front contract briefly poked above $3.70
several times early in the session but could not hold above it.
After another day or two of mild weather, private forecaster
MDA Weather Services expects mostly below-normal temperatures to
dominate the eastern two-thirds of the nation in its six- to
Front-month gas futures on the New York Mercantile
Exchange ended down 4.3 cents, or 1.2 percent, at $3.617 per
million British thermal units, after climbing early to a
3-1/2-week high of $3.705.
The nearby contract finished up 2.8 percent last week for
its second straight weekly gain, following a 1.3 percent rise in
the previous week.
Technical traders said the front month needed a close above
resistance in the low-$3.70s to set the stage for more upside.
But with stockpiles at comfortable levels and production
flowing at a record-high pace, many traders remained skeptical
of further gains unless the cold is sustained.
With over a billion cubic feet per day of new gas flowing
from Marcellus shale this month and more supply likely coming,
many traders agreed that temperatures this winter will have to
stay cold if prices are to avoid testing the $3 mark.
Traders are expecting the season's first draw when the U.S.
Energy Information Administration on Thursday releases its gas
inventory report for the week ended Nov. 15.
Early withdrawal estimates range from 15 to 41 billion cubic
feet. That would compare with a 36 bcf decline in the
year-earlier week and a five-year average draw of 2 bcf for that
EIA reported last week that total domestic gas inventories
stood at 3.834 trillion cubic feet, just 2 percent below last
year's record highs at that time but 1.5 percent above the
Baker Hughes data last week showed the gas drilling
rig count rose for the fourth time in five weeks, gaining five
to 370. The count has risen in 13 of the last 21 weeks.
A rising count can stir talk that new pipelines and
processing plants, particularly in the Northeast, may be
encouraging producers to hook up more wells and pump more gas
into an already well-supplied market.
The EIA expects U.S. gas production in 2013 to hit a record
high for the third straight year, then climb again in 2014.
In the ICE cash market, prices for Tuesday delivery at Henry
Hub , the benchmark supply point in Louisiana,
climbed 15 cents to $3.71, with late differentials firming
slightly to 3 cents under NYMEX from a 4-cent discount Friday.
Gas on the Transco pipeline at the New York citygate jumped 72 cents to $3.80 on the chilly Tuesday
outlook. Chicago rose 10 cents to $3.73.