U.S. natgas futures slip 3 pct despite weekday demand http://in.reuters.com/article/2012/09/17/...gas-idINL1E8KH5MW20120917 UPDATE 1-U.S. natgas futures slip 3 pct despite weekday demand * Milder weather on tap for consuming regions
* Upcoming inventory builds should regain momentum
* Nuclear power plant outages could limit losses
* Coming up: API oil data Tuesday, EIA oil data Wednesday (Adds cash prices, updates futures prices)
By Eileen Houlihan
NEW YORK, Sept 17 (Reuters) - U.S. natural gas futures slid nearly 3 percent early on Monday, pressured for a third straight day by forecasts for milder autumn weather that should curb demand and lead to increased storage builds in the coming weeks. Traders expect high nuclear power plant outages to limit losses, but most said prices will have a hard time breaking back above $3 per million British thermal units. At that level, gas tends to lose much of its appeal over coal for power generation. As of 9:41 a.m. EDT (1341 GMT), front-month October natural gas futures on the New York Mercantile Exchange were at $2.867 per mmBtu, down 7.6 cents, or nearly 3 percent. The nearby contract peaked at $3.277 in late July, its highest level since December. In the cash market, gas bound for the NYMEX delivery point Henry Hub NG-W-HH in Louisiana was heard early down 11 cents at $2.83 on active volume near 946 million cubic feet. Early cash deals were done at 10 cents under the front-month contract, little changed from deals done late on Friday at a 12-cent discount. Gas on the Transco pipeline at the New York citygate NG-NYCZ6 was heard down 8 cents early at $2.89 on volume near 276 million cubic feet. The National Weather Service's six- to 10-day outlook issued on Sunday called for below-normal temperatures for most of the eastern half of the nation and above-normal readings for about the western third. On the nuclear front, outages on Monday totaled 15,800 megawatts, or 16 percent of U.S. capacity, up from 10,100 MW out on Friday, 8,600 MW out a year ago, and a five-year outage rate of about 9,700 MW. STOCKS STILL HIGH DESPITE LIGHT BUILDS
The U.S. Energy Information Administration last week said domestic gas inventories rose during the previous week by just 27 billion cubic feet, to 3.429 trillion cubic feet. While some traders viewed the build as neutral, and in line with Reuters poll estimates for a 28-bcf gain, many noted it was well below last year's gain of 80 bcf and the five-year average increase for that week of 72 bcf. Lingering production cuts from Hurricane Isaac and strong air-conditioning demand slowed the injection. It was the 19th time in the past 20 weeks that the build fell short of the seasonal norm. While record heat this summer helped cut a huge storage surplus to last year by more than 60 percent from its late-March peak near 900 bcf, traders said stocks are already 81 percent full, according to the EIA's revised 4.239-tcf estimate of storage capacity. Stocks remain 11 percent above the same week in 2011 and 9 percent above the five-year average, offering a huge cushion that can help offset any weather-related spikes in demand or more supply disruptions from storms. (Storage graphic: link.reuters.com/mup44s) Early injection estimates for this week's EIA report range from 40 bcf to 71 bcf versus a year-earlier build of 89 bcf and the five-year average increase for the week of 73 bcf. DRILLING RIGS AT 13-YEAR LOW Baker Hughes on Friday said the number of rigs drilling for natural gas in the United States slid by four to a 13-year low of 448. (Graphic: r.reuters.com/dyb62s) The count fell for the 15th time in 17 weeks. The nearly steady decline in gas-directed drilling over the last 10 months has fed expectations that producers were getting serious about stemming the flood of record supplies. So far, however, there is little evidence that gas output is slowing. |
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