October 11, 2013 / 7:20 PM / 4 years ago

UPDATE 3-U.S. natgas futures gain 8 pct this week in technical rally

* Cooler weather on tap in long-term outlooks

* Prices remain above key technical resistance levels

* Tropical low in Atlantic basin could become cyclone soon

By Eileen Houlihan

NEW YORK, Oct 11 (Reuters) - U.S. natural gas futures rose more than 1 percent on Friday and nearly 8 percent this week, lifted by continued technical buying and short-covering ahead of cooler weather expected later this month.

“Weather forecasts after the next five days of above-normal temperatures in the eastern half of the country have shifted colder in the central part of the U.S., from Texas northward into the upper Midwest and to below- to well-below normal temperatures in the six- to 10-day period,” said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.

The nearby contract garnered momentum from the cooler-trending weather forecasts as well as offshore Gulf of Mexico production cuts from Tropical Storm Karen last week and over the weekend.

Front-month November natural gas futures on the New York Mercantile Exchange rose 5.3 cents, or 1.42 percent, to settle at $3.776 per million British thermal units.

The contract rose as high as $3.795 on Thursday after breaking through technical resistance at the 100-day and 200-day moving averages over the past several days. But prices remain slightly below the two-month high of $3.82 hit three weeks ago.

Prices slid to a five-week low of $3.402 two weeks ago.

Other months ended higher as well, with the December contract up 5.2 cents, or 1.34 percent, at $3.929 and winter months gaining about 5 cents each.

In the cash market, gas for weekend delivery at the NYMEX benchmark, Henry Hub in Louisiana, slid 2 cents to $3.72. Late deals eased to 4 cents under the front-month contract, compared with those done late Thursday at a 1-cent discount.

Gas on the Transco pipeline at the New York citygate fell 17 cents to $3.42, while Chicago gas was 1 cent lower at $3.73.

The latest National Weather Service six- to 10-day outlook issued on Thursday called for above-normal temperatures for the eastern third of the nation, stretching across parts of the South and also in the Northwest, with a large swath of below-normal readings for the rest of the nation.

Thursday’s gas storage report from the U.S. Energy Information Administration showed total domestic inventories rose last week by 90 billion cubic feet to 3.577 trillion cubic feet.

Total stocks stand just about 4 percent below last year’s level and are nearly 2 percent above the five-year average.

The EIA on Friday said it would not release weekly inventory data or other data after this week due to the government shutdown. The agency said energy companies should continue to submit their data to the EIA and it will be processed after the furlough period.

The U.S. National Hurricane Center was tracking a low pressure system well west-southwest of the Cape Verde Islands in the Atlantic basin. The system had a 50 percent chance to develop further in the next 48 hours, but it was not any immediate threat to offshore energy production.

The U.S. Nuclear Regulatory Commission is not updating its daily reactor status report due to the government shutdown. However, Reuters data showed about 13,700 megawatts, or 14 percent of U.S. capacity, was likely offline on Friday, down from 19,100 MW out a year ago and a five-year average outage rate of 18,800 MW.

Baker Hughes drilling rig data on Friday showed the gas-directed rig count slid for the third time in four weeks, but the count at 369 remains well above the 18-year low of 349 hit in June.

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