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U.S. natgas futures fluctuate on weather, storage expectations

Source: Reuters - Wed, 18 Dec 2013 05:52 PM
Author: Reuters
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(Updates lead and prices, adds storage poll)

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

At 12:27 a.m. EST (1727 GMT), front-month January natural gas futures on the New York Mercantile Exchange were at $4.296 per million British thermal units, up 0.9 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 5 cents at $4.26. Late deals were done at 4 cents under the front-month contract, compared with those done at a 2 cent discount late Tuesday.

Gas on the Transco pipeline at the New York citygate <E-TSCO6NY-IDX> was heard at $4.39, down from Tuesday's average of $5. In Chicago, gas on the Chicago citygate pipeline <MC-CHICIT-IDX> was heard at $4.50, up 10 cents from Tuesday's average of $4.40.

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.

A Reuters poll showed that industry traders and analysts predict that Thursday's report from the U.S. Energy Information Administration will show last week's natural gas storage drawdown was 258 billion cubic feet.

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, Eileen Houlihan; and Julia Edwards; Editing by Lisa Von Ahn, Meredith Mazzilli and Alden Bentley)

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