By Joe Silha
NEW YORK, May 1 (Reuters) - U.S. natural gas futures trimmed
early gains but remained higher on Wednesday, underpinned by
estimates for another light weekly inventory build in a Thursday
report and cool forecasts that should force more homeowners and
businesses to turn up the heat.
Temperatures in the Midwest and Texas were expected to sink
far below normal later this week to again kick up heating
demand. An unexpectedly chilly April has helped slow storage
injections early in the stock building season.
'I think prices moved up on the cooler forecasts, but the
market may be running out of steam again,' a Chicago-based
At 12:45 p.m. EDT (1645 GMT), front-month gas futures
on the New York Mercantile Exchange were up 4.5 cents, or 1
percent, at $4.388 per million British thermal units after
climbing early to a new 21-month high of $4.444.
The front contract lost nearly 6 percent last week, its
first weekly decline in 10 weeks, but still managed a 7.9
percent gain in April for the third straight monthly rise.
Despite the new high today, technical traders said the
market seemed to be struggling here, noting prices have broken
above the $4.40 level several times in the last two weeks only
to be turned back by strong selling or profit taking.
Some noted that gas prices at current levels were likely to
slow demand by prompting more utilities to use coal rather than
gas for power generation and to increase the supply by
encouraging producers to turn on more wells.
ANOTHER LIGHT INVENTORY BUILD EXPECTED
Utilities typically stockpile natural gas from April through
October, then withdraw stored supplies from November through
March to help meet peak winter heating demand.
The stock-building season got off to a slow start, with only
two injections reported so far after an unusually cold spring
forced homeowners and businesses to use more gas for heating.
(Storage graphic: http://link.reuters.com/mup44s )
Traders and analysts polled by Reuters are looking for
another light build when the U.S. Energy Information
Administration releases weekly inventory data on Thursday, with
most expecting a 28 billion cubic feet gain.
Stocks rose 31 bcf during the same week last year, while the
five-year average build for that week is 67 bcf.
EIA data last week showed that total domestic gas
inventories had climbed to 1.734 trillion cubic feet, about 807
bcf, or 32 percent, below last year's record highs at this time,
and 94 bcf, or 5 percent, below the five-year average.
PRODUCTION CLIMBS DESPITE FEWER RIGS
EIA data on Tuesday showed gross natural gas production in
February climbed for the first time in three months. Output rose
to about 1.27 bcf per day, or 1.8 percent, above the same month
last year after dropping below year-ago levels in January for
the first time since 2010.
The report dimmed prospects that record high output would
slow anytime soon despite the fact that the Baker Hughes gas
drilling rig count has dropped to a 14-year low.
(Rig graphic: http://link.reuters.com/nuz86t )
The EIA recently estimated that marketed gas output in 2013
will hit a record high for the third straight year.
(Additional reporting by Eileen Houlihan; Editing by Grant
McCool and Bob Burgdorfer)
Keywords: MARKETS NYMEX/NATGAS
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