By Eileen Houlihan
NEW YORK, Dec 13 (Reuters) - U.S. natural gas futures edged
lower for a sixth straight day early Thursday, falling to a
two-month spot chart low amid forecasts for mild weather in the
eastern half of the country.
In addition, traders expect weekly government storage data
to show only a slight drawdown from winter inventories, leaving
storage back above year-ago levels.
Most said that without some sustained cold to boost heating
loads, gas prices are likely to remain lower.
Traders and analysts expect weekly data from the U.S. Energy
Information Administration to show a draw of about 4 billion
cubic feet when it is released Thursday at about 10:30 a.m. EST
(1530 GMT), a Reuters poll showed.
Stocks fell an adjusted 79 bcf during the same week last
year, and on average over the past five years have fallen 113
bcf that week.
As of 9:32 a.m. EST (1432 GMT), front-month January gas
futures on the New York Mercantile Exchange were at
$3.345 per million British thermal units, down 3.7 cents, after
sinking to a two-month low of $3.328 in electronic trading.
The front-month contract hit a 13-month high of $3.933 in
late November before sliding about 9 percent in the past five
sessions, its biggest five-day slide in 12 weeks.
In the cash market, gas for Friday delivery at the NYMEX
benchmark Henry Hub in Louisiana was heard early down
6 cents at $3.27 on volume near 709 million cubic feet.
Early cash deals were done at 6 cents under the front month
contract, firming just slightly from deals done late on
Wednesday at a 7-cent discount.
Gas on the Transco pipeline at the New York citygate was heard down nearly 50 cents early at $3.66 on
volume near 157 mmcf.
The latest National Weather Service six-to-10-day forecast
issued on Wednesday again called for above-normal temperatures
for most of the eastern half of the country and mainly normal
readings in the West. Some below-normal temperatures were
expected only on the West Coast and a small portion of the
Nuclear outages totaled about 12,300 megawatts, or 12
percent of U.S. capacity, even with Wednesday's outages, but up
from 9,500 MW out a year ago and a five-year outage rate of
about 9,100 MW.
INVENTORIES SLIP BELOW YEAR-AGO, STILL HIGH
Data from the EIA last week showed gas inventories for the
week ended Nov. 30 fell 73 bcf to 3.804 trillion cubic
While the draw trimmed storage to below year-ago levels for
the first time in 13 months, some traders noted that total
inventories were still 5 percent above the five-year average, a
comfortable cushion to meet any winter spikes in demand or
unexpected disruptions in supply.
(Storage graphic: http://link.reuters.com/mup44s)
A huge inventory surplus to last year, which peaked in April
at nearly 900 bcf, has been wiped out, but stocks are expected
to climb back above year-ago levels in this week's EIA report.
Stocks hit a record high of 3.929 tcf in early November,
making this the fourth straight year in which gas inventories
have headed into the heating season at a record peak.
RIGS DECLINE, PRODUCTION STILL NEAR RECORD
Baker Hughes data last week showed the gas-directed rig
count fell by seven the prior week to 417, still just above the
13-1/2-year-low of 413 posted four weeks ago.
(Rig graphic: http://r.reuters.com/dyb62s)
Drilling for natural gas has mostly been in decline for more
than a year, with gas rigs down 55 percent since peaking in 2011
at 936 in October.
In its short-term energy outlook for December, EIA said
Tuesday it expects gas production in 2013 to climb to a record
high for a third straight year, while consumption was expected
to drop slightly from 2012 levels.
(Editing by Grant McCool and Sofina Mirza-Reid)
Keywords: MARKETS NYMEX/NATGAS
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