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U.S. natgas futures fall on profit-taking

Source: Reuters - Tue, 24 Dec 2013 02:08 PM
Author: Reuters
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NEW YORK, Dec 24 (Reuters) - U.S. natural gas futures fell by more than 2 percent on Tuesday on profit-taking after reaching their highest point since July 2011 the previous day.

Natural gas futures reached $4.532 on Monday, surpassing Friday's high of $4.492, which had been the highest price since July 2011.

At 9:00 a.m. EST (1400 GMT), front-month January futures on the New York Mercantile Exchange were up 1.8 cents at $4.445 per million British thermal units.

Private forecaster MDA Weather Services said temperatures will stay cold in the Midwest and Northeast through to the New Year and will then moderate slightly in the 11 to 15 day outlook.

The consistent chill in November and December weather has led to storage draws that have more than doubled the norm for that period and prompted analysts to scale back end-winter inventory estimates.

U.S. Energy Information Administration data last week showed total natural gas inventories fell by a record 285 billion cubic feet, eclipsing the previous benchmark drop of 274 bcf, set in January 2008.

Total stockpiles stand at 3.248 trillion cubic feet, 488 bcf, or 13 percent, below last year, and 261 bcf, or 7 percent, below the five-year average.

This Friday's EIA report is likely to show another above-average drawdown, with early estimates ranging from 149 bcf to 177 bcf. Stocks fell just 74 bcf during the same week last year, while five-year average decline for the week is 125 bcf.

The report will be delayed one day this week due to the Christmas holiday on Wednesday.

If drawdowns for the rest of the heating season match the five-year average, storage would end winter below 1.5 tcf. That would be the lowest end winter inventory since 2008 and could help prop up prices next year as utilities scramble to rebuild stocks for next heating season.

Traders noted the premium of the March 2014 gas futures over the April contract shot up to its widest in seven months, as the March contract rose along with other winter heating contracts.

In U.S. nuclear news, there were 2,060 megawatts out on Tuesday versus 2,400 MW out on Monday. That compares with 11,660 MW a year ago and a five-year average of 6,500 MW. (Reporting by Julia Edwards and Joe Silha; Editing by Nick Zieminski)

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