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U.S. natural gas futures edge higher as cold sets in
December 28, 2012 / 3:06 PM / 5 years ago

U.S. natural gas futures edge higher as cold sets in

NEW YORK, Dec 28 (Reuters) - U.S. natural gas futures edged
higher early Friday, backed by forecasts for cold weather over
the next 10 days that should force homeowners and businesses to
turn up their heaters.
    While traders expect strong heating demand to underpin
prices in the near term, they noted that 11- to 15-day forecasts
were still calling for a warm-up, particularly for the eastern
half of the country.
    Most agreed prices were unlikely to move significantly
higher unless the cold was sustained, with inventories still at
record highs for this time of year and production flowing at or
near an all-time peak.
    At 9:45 a.m. EST (1445 GMT), the new front-month February
natural gas futures contract on the New York Mercantile
Exchange was up 5.7 cents, or 1.7 percent, at $3.469 per million
British thermal units after trading between $3.36 and $3.487. 
    The front contract, which hit a 13-month high of $3.933 five
weeks ago, slid to a 2-1/2-month low of $3.261 in mid-December.
    But the contract is up more than 14 percent this year and
looks set to post its first yearly gain since 2007. Only two
trading sessions remain in the year.
    The boom in shale gas has kept gas prices on the defensive
for most of the last five years, but as prices lost ground,
demand picked up, particularly from utilities, and helped
stabilize the market.
    While gas demand can slow during the holidays regardless of
weather because many schools and businesses are closed, traders
said prices could garner support from nuclear plant outages,
which are still running at about 10,300 megawatts this week, or
more than 4,000 MW above average for this time of year.
    Gas-fired plants are typically used to replace any lost
nuclear generation.
    Early cash quotes for Dec. 29-31 delivery at Henry Hub
NG-W-HH, a key supply point in Louisiana, rose 9 cents to
$3.40 on light end-of-month volume of 300 million cubic feet.
The Hub posted a 2-1/2-month low of $3.15 on Dec. 14.
    Early Hub differentials slipped slightly to about 2 cents
under NYMEX from about flat on Thursday.
    Prices on Transco pipeline at the New York citygate
NG-NYCZ6 jumped more than $4 to above $10 on the cold
late-week outlook. Volume was moderate at about 310 mmcf.    
    MDA Weather Services expects temperatures for most of the
United States to average below normal for the next 10 days, but
the private forecaster expects warmer readings through the
Midwest and East during the second week of January.

 (Reporting by Joe Silha; Editing by Kenneth Barry and John

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