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U.S. natgas futures slide on weakened heating demand, technicals

Source: Reuters - Tue, 17 Dec 2013 05:16 PM
Author: Reuters
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(Updates prices to midday, adds analyst quote)

NEW YORK, Dec 17 (Reuters) - U.S. natural gas futures slid on Tuesday on technical selling and forecasts for weaker heating demand as warmer weather moves into the East.

"The market simply needs winter-like weather for prices to mount another upward move in the short term," said Dominick Chirichella, a partner at Energy Management Institute.

At 11:56 a.m. EST (1655 GMT), front-month January futures on the New York Mercantile Exchange were down 3.1 cents at $4.248 per million British thermal units.

In the cash market, gas for delivery Wednesday at the Henry Hub <GT-HH-IDX> in Louisiana was down 1 cent at $4.21. Late deals were heard at 2 cents under the front-month contract, compared with those done late Monday at a 3-cent premium.

Gas on the Transco pipeline at the New York citygate <E-TSCO6NY-IDX> was down $1.29 at $5.01, while Chicago <MC-CHICIT-IDX> saw gas prices at $4.40.

Chirichella said in a report that he was downgrading his natural gas view and bias to neutral as "the market sentiment seems to be changing once again and as the spot contract breached the technical support level of $4.30 mmBtu."

Private forecaster MDA Weather Services, in its one- to five-day outlook, forecast more warmth would spread East. It expects less cold than previously forecast in its six- to 10-day outlook.

The U.S. National Weather Service, in its six- to 10-day outlook, forecast below-normal temperatures in New England and the central part of the country from Minnesota to Texas, and above-normal conditions in the West and Southeast.

Early withdrawal estimates for this week's storage report from the U.S. Energy Information Administration range from 220 billion cubic feet to 280 bcf, versus a year-ago draw of 70 bcf and a five-year average draw of 133 bcf. The report is due Thursday.

Last week's gas storage report showed total inventories stood at 3.533 trillion cubic feet, more than 7 percent below the year-earlier level and nearly 3 percent below the five-year average.

In U.S. nuclear news, there were 6,000 megawatts out on Tuesday, versus 6,200 MW out on Monday. That compares with 12,000 MW out a year ago and a five-year average outage rate of 7,800 MW. (Reporting by Julia Edwards and Scott DiSavino; Editing by John Wallace and Meredith Mazzilli)

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