By Eileen Houlihan
NEW YORK, May 7 (Reuters) - U.S. natural gas futures sank to
their lowest level in just over a month on Tuesday, pressured by
forecasts calling for moderating temperatures over the coming
days and weeks.
Forecaster MDA Weather Services said its near-term, one to
five-day forecast called for a 'limited energy demand setup,'
adding the forecast turned warmer in the Midwest during the
middle of next week, with the warmth pressing into the East at
the end of the six to 10-day period.
Traders said the milder weather forecasts and expectations
for another above-average storage injection weighed on prices.
Last week's unexpectedly large weekly inventory build led to a
7-percent selloff on Thursday before prices recovered slightly
Prices remain well under last week's 21-month high hit
A long cold winter put a huge dent in inventories, and
lingering cool weather this spring led to a slow start to the
But the onset of milder spring weather starting this week
has curbed late-season heating demand before heavy cooling loads
As of 9:40 a.m. EDT (1340 GMT), front-month June natural gas
futures on the New York Mercantile Exchange were at
$3.988 per mmBtu, down 2.3 cents, after sliding as low as $3.96,
the lowest mark since early April.
The contract rose to $4.444 last Wednesday, its highest mark
since late July 2011.
In the cash market, gas for Wednesday delivery at the NYMEX
benchmark Henry Hub in Louisiana was heard down 5
cents at $3.88 on volume near 585 million cubic feet.
Early deals, however, firmed slightly to 8 cents under the
June contract, from deals done late Monday at a 12-cent
Gas on the Transco pipeline at the New York citygate was heard up 1 cent at $4.07 but just one trade was
The latest National Weather Service eight to 14-day forecast
issued on Monday called for above-normal temperatures for about
the western third of the nation and in the Northeast, with
below-normal readings in the Southeast and most of Texas and
normal readings elsewhere.
Nuclear plant outages totaled 18,900 megawatts, or 19
percent of U.S. capacity, up from 18,200 MW out on Monday, but
down from 23,500 MW out a year ago and a five-year average
outage rate of 21,300 MW.
LARGER-THAN-EXPECTED BUILD BUT STOCKS BELOW NORMAL
Last week's gas storage report from the U.S. Energy
Information Administration showed domestic inventories rose in
the prior week by 43 billion cubic feet, above Reuters poll
estimates for a 28 bcf build and the year-ago gain of 31 bcf.
But inventories started the injection season about three
weeks later than expected due to the cold spring. Stocks, at
1.777 trillion cubic feet, are nearly 31 percent below last year
and more than 6 percent below the five-year average.
(Storage graphic: http://link.reuters.com/mup44s)
Early injection estimates for this week's EIA gas storage
report range from 58 bcf to 91 bcf, versus a 30 bcf build in the
same week last year and a five-year average rise for that week
of 69 bcf.
Baker Hughes data last week showed the number of
rigs drilling for natural gas in the United States fell by 12 to
an 18-year low of 353.
(Editing by Sofina Mirza-Reid)
Keywords: MARKETS NYMEX/NATGAS
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