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U.S. natgas futures edge higher on storage expectations

Source: Reuters - Wed, 18 Dec 2013 02:49 PM
Author: Reuters
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(Adds cash prices, updates futures prices)

NEW YORK, Dec 18 (Reuters) - U.S. natural gas futures edged higher early on Wednesday as expectations for a big inventory withdrawal this week offset forecasts for warmer weather that should curb heating demand.

At 9:36 a.m. EST (1436 GMT), front-month January natural gas futures on the New York Mercantile Exchange were at $4.292 per million British thermal units, up 0.5 cent.

The nearby contract remained under the 7-month high of $4.443 hit last week, which was less than 1 cent shy of its highest mark in more than two years.

In the cash market, gas for Thursday delivery at the NYMEX benchmark, Henry Hub <GT-HH-IDX> in Louisiana, was heard up 6 cents at $4.27. Early deals were done at 2 cents under the front-month contract, even with those done late Tuesday.

Gas on the Transco pipeline at the New York citygate <E-TSCO6NY-IDX> had not yet traded but was heard bid at $4.32 and offered at $4.70, down from Tuesday's average of $5.

Private forecaster MDA Weather Services called for warmth to spread east in its one-to-five-day outlook. It said it expected less cold than previously forecast in its six-to-10-day outlook.

"Even with warmer-than-normal temperatures heading to the East Coast over the weekend, the market is not yet ready to enter into a major sell-off as total natural gas inventories remain below both last year and the five-year average," said Dominick Chirichella, a partner at Energy Management Institute.

"The gap is expected to widen significantly after this week's expected above-normal inventory withdrawal," Chirichella added.

Withdrawal estimates for Thursday's gas storage report from the U.S. Energy Information Administration range from 220 billion cubic feet to 284 bcf, with most in the 250s bcf.

Stocks fell an adjusted 70 bcf in the same year-ago week and on average over the past five years have lost 133 bcf that week.

Last week's EIA 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, 5,300 megawatts were out on Wednesday, versus 6,000 MW out on Tuesday, 12,000 MW out a year ago and a five-year average outage rate of 7,500 MW.

(Reporting by Scott DiSavino and Eileen Houlihan; Editing by Lisa Von Ahn and Meredith Mazzilli)

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