By Eileen Houlihan
NEW YORK, Feb 5 (Reuters) - U.S. natural gas futures rose
early Monday, lifted by near-term cold weather in the eastern
half of the country that has boosted heating demand.
But with milder weather on tap in longer-term outlooks and
still-bloated inventories, most traders expect limited upside.
As of 9:38 a.m. EST (1438 GMT), front-month March natural
gas futures on the New York Mercantile Exchange were at
$3.32 per million British thermal units, up 0.5 cent, or well
under 1 percent.
The front month contract hit a 6-1/2-week high of $3.645 two
weeks ago after reaching a more than three-month low of $3.05 in
In the cash market, gas for delivery at the NYMEX benchmark
Henry Hub in Louisiana was heard early up 7 cents at
$3.34 on light volume near 421 million cubic feet.
Early deals firmed slightly to about even with the
front-month contract, from deals done late Monday at a 2-cent
But while cold lingered in the Northeast, high temperatures
Tuesday were expected to climb about 5 degrees from Monday and
another 7 degrees on Wednesday, according to the Weather
Channel's weather.com. Gas on the Transco pipeline at the New
York citygate was heard down nearly $3 at an early
average near $10.50 on volume near 178 mmcf.
The latest National Weather Service six to 10-day forecast
issued on Monday again called for above-normal readings for
about the eastern half of the United States, with below-normal
temperatures across the West and some normal readings in the
Nuclear outages totaled 8,500 megawatts, or 8 percent of
U.S. capacity, flat to Monday's outages, up from 7,900 MW out a
year-ago, but below the five-year average outage rate of about
STORAGE DRAW FALLS SHORT OF EXPECTATIONS
Last week's storage report from the U.S. Energy Information
Administration showed domestic gas inventories fell the prior
week by 194 billion cubic feet, below industry expectations for
a 206-bcf draw.
Most traders viewed the decline as bearish, noting it was
below market expectations for the first time in five weeks.
But others noted the draw was above the year-ago drop of 149
bcf and the five-year average draw of 178 bcf.
Storage now stands 202 bcf, or about 7 percent, below last
year's record high levels, but 304 bcf, or more than 12 percent,
above the five year-average.
(Storage graphic: http://link.reuters.com/mup44s)
Early withdrawal estimates for this week's inventory report
range from 126 bcf to 162 bcf, well above the 94 bcf pulled from
storage during the same week in 2012, but in line with the
five-year average decline for that week of 165 bcf.
If drawdowns for the rest of winter match the five-year
average, inventories will end March at 2.032 tcf, about 18
percent above normal but 18 percent below last year, when stocks
finished a very mild heating season at a record-high 2.48 tcf.
GAS RIG COUNT FALLS, OUTPUT STILL NEAR RECORD
Baker Hughes data last week showed the gas-directed
drilling rig count fell for the third time in four weeks,
dropping by six to 428.
While the gas rig count is hovering not far above the
13-1/2-year low of 413 hit about three months ago, production
has shown no significant sign of slowing.
(Rig graphic: http://r.reuters.com/dyb62s)
EIA estimates that marketed gas output in 2013 will hit a
record high for the third straight year.
(Editing by Grant McCool and Nick Zieminski)
Keywords: MARKETS NYMEX/NATGAS
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