* Benchmark Henry Hub at lowest price since Sept 2009
* Mild weather, record-high inventories continue to weigh
* Gas futures edge higher after fresh 10-year spot low
* Coming up: API oil data Tuesday, EIA oil data Wednesday
By Eileen Houlihan
NEW YORK, April 2 (Reuters) - U.S. spot natural gas prices
fell across the country for a sixth time in seven sessions on
Monday, with record-high inventories and production coupled with
mild spring weather pushing benchmark Henry Hub gas to its
lowest in more than two years.
Despite the return of weekday industrial demand, gas at the
U.S. benchmark supply point Henry Hub r.reuters.com/dyb62s )
The steady drop in dry gas drilling this year -- the gas
count is still down nearly 30 percent since peaking at 936 in
mid-October -- had stirred expectations that low gas prices
would finally force producers to curb gas output and tighten
But the drop has yet to be reflected in pipeline flows,
which are still estimated to be at or near record highs,
primarily due to rising output from shale.
U.S. Energy Information Administration production data last
week offered little hope for the bulls, with January gross gas
output climbing to a record of 72.85 billion cubic feet per day,
eclipsing the previous peak of 72.68 bcfd in November.
The slight drop the agency reported for December, the first
measurable decline since well freeze-offs curbed output the
prior winter, had raised expectations that producers might
finally be curtailing output.
Some analysts say the gas-directed rig count may have to
drop below 600 to reduce flowing supplies significantly, noting
the producer shift to higher-value oil and gas liquids plays
still produces plenty of associated gas that partly offsets any
reductions in pure dry gas output.
Most analysts do not expect any major slowdown in gas output
until later this year.
EIA data on Thursday showed gas inventories rose by 57 bcf
to 2.437 trillion cubic feet.
(Storage graphic: link.reuters.com/mup44s)
The build, the second in 2012 and the largest ever for
March, drove stocks further into record territory for this time
of year and sharply widened the already-huge surpluses to
year-ago and the five-year average.
Utilities typically build inventories from April through
October to help meet peak winter heating needs, but builds this
year started two weeks earlier than usual. Storage is set to
finish the month near 2.5 tcf, about 60 percent above normal and
well above the previous record of 2.148 tcf set in 1983.
Early injection estimates for this week's EIA report range
from 30 bcf to 49 bcf versus last year's adjusted draw of 29 bcf
and the five-year average build for that week of 8 bcf.
The inventory surplus will provide a hefty cushion to meet
any spikes in demand or storm-related disruptions in supply this
year. It is expected to grow further in coming weeks, at least
until stronger air-conditioning demand slows builds.
Nuclear plant outages were running at about 23,000
megawatts, or 23 percent, on Monday, up from 20,900 MW out a
year ago and a five-year outage rate of about 20,500 MW.
Traders said the outages should add more than 1 bcf to daily
Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu)
Henry Hub 1.88 2.00
New York city gate 2.06 2.16
Chicago city gate 1.97 1.99
Panhandle (Mid-continent) 1.78 1.80
Northern at Demarcation (Minn.) 1.91 1.86
Southern California Border 2.16 2.12
Katy Hub (East Texas) 1.83 1.92
Waha (West Texas) 1.80 1.91
Dominion-South (Appalachia region) 1.96 2.04
Columbia TCO (Appalachia region) 1.90 1.98
For more U.S. Spot Natural Gas prices click on <0#NG-US>
- Canadian Spot Natural Gas Prices..............<0#NG-CA>
- U.S. Spot Gas versus Oil Comparisons..........
- BTU U.S. Spot Natural Gas Prices..............<0#NG-BTU>
- U.S. Nuclear Power Reactor Outage Table ......
- North American Power Plant Outage Table .....
- North American Power Transmission Table .....
- U.S. EEI Electricity Output Report ...........
- U.S. EEI Electricity Output Table ............
- NYMEX Natural Gas Futures .................... <0#NG:>
- NYMEX Crude Oil Futures .......................<0#CL:>
(Editing by Dale Hudson)
slid 12 cents on average to $1.88 per million British thermal
units, its lowest price since September 2009, Reuters data
Hub cash prices lost 2 cents on Friday for gas delivered
through Monday and are down more than $3, or 62 percent, from
their 2011 high of $4.92 hit during a June heatwave.
Hub cash prices have not been over $4 since mid-September
and have failed to break above $3 this year. Monday's daily Hub
average was also below the year-ago price of $4.32.
On NYMEX, the front-month contract traded late up about 2
cents at $2.142, after sliding early to a 10-year spot chart low
In major consuming markets, gas for Tuesday delivery on the
Transco pipeline at the New York City gate slid 10
cents on average to $2.06, while Chicago gas was 2
cents lower on the day at $1.97.
Temperatures in both key gas-consuming cities were seen
mostly in the high 50s to low 60s Fahrenheit for the next
several days, according to the Weather Channel's weather.com.
The National Weather Service six- to 10-day outlook issued
on Sunday called for above-normal readings for much of the
mid-Continent and normal readings along the East Coast. Some
below-normal temperatures were expected only in the West.
PRODUCTION BIG PROBLEM FOR PRICES
Baker Hughes data on Friday showed the gas-directed rig
count rose by six to 658 after hitting a 10-year low of 652 the
prior week. It was the first gain in the gas rig count in 12