(Adds detail on EIA storage report, analyst reaction, updates
NEW YORK Jan 3 U.S. natural gas futures rose on
Friday, shrugging off a smaller than expected drop in stockpiles
last week as winter heating demand continued to offer momentum.
Natural gas stocks fell by 97 billion cubic feet during the
week ending Dec. 27, according to the Energy Information
Administration, smaller than the 126 draw forecast in a Reuters
The fall was smaller than the 126 bcf drop during the same
week in 2012 and the five-year average of 121 bcf.
But continuing winter weather helped bolster futures, which
rebounded into the positive by midday.
At 11:51 a.m. EST (1651 GMT) front-month February gas
futures on the New York Mercantile Exchange, rose 3.9
cents, or 1 percent, to $4.361 per million British thermal
units, rebounding from losses earlier of more than 2 percent.
"The weather forecast for the latter half of January doesn't
look supportive, and we could see some more pressure, but I
don't think the market is going to get aggressively short with
this much winter left," said Gene McGillian, analyst at
Tradition Energy in Stamford, Connecticut.
In the ICE cash market, prices for weekend delivery at Henry
Hub GT-HH-IDX, the benchmark supply point in Louisiana, rose 8
cents to $4.41, with late trade differentials strengthening to 5
cents over NYMEX, from less than a 1 cent premium on Thursday.
Gas on the Transco pipeline at the New York citygate
E-TSCO6NY-IDX dropped $21.93 to $9.19 as a demand constraints
caused by the forecast for cold weekend weather eased.
(For daily ICE U.S. cash gas prices, click <0#GAS-IDX=ICE>)
Private forecaster MDA Weather Services called for cold,
stormy weather to continue in the 1- to 5-day range, but
moderate temperatures are expected in the 6- to 10-day range,
followed by strong warmth in the East in the 11- to 15-day
Sub-zero temperatures accompanied a snow storm that has made
its way through much of the Midwest and the Northeast in the
second half of the week, causing some pipelines to reach
capacity. Gas on the Transco pipeline at the New York citygate
E-TSCO6NY-IDX was up $15.72 to $31.12 on Thursday.
Chilly early winter weather drove the front month contract
up to finish last year with a 27 percent gain, making it the
biggest gaining commodity of the year. The contract posted a
2-1/2-year high of $4.532 per million British thermal units on
Last Friday's storage report from the U.S. Energy
Information Administration showed total gas inventories fell the
week ending Dec. 20 by 177 billion cubic feet to 3.071 trillion
cubic feet. The report was delayed one day last week by the
Nuclear plant outages on Friday totaled 1,540 megawatts, or
about 2 percent of U.S. capacity. That was down from Thursday's
total of 1,600 MW, and well below the 7,500 MW out a year ago
and the five-year average outage rate of 4,750 MW.
(Reporting by Julia Edwards; Editing by Bernadette Baum,
Meredith Mazzilli, Chris Reese and Nick Zieminski)