US spot natgas rises 2nd day, nuclear outages support

NEW YORK (Reuters) - U.S. spot natural gas rose at nearly every price point across the country for a second straight day on Tuesday, as the high level of nuclear power plants offline for maintenance boosted near-term demand.

Some mid-Continent prices showed the day's only losses, edging lower amid milder autumn weather that curbed regional demand and was expected to limit further gains in coming days and weeks, traders said.

Gas for Wednesday delivery at benchmark supply point Henry Hub in Louisiana rose 2 cents on average to $2.84 per million British thermal units, after gaining 6 cents on Monday for gas delivered on Tuesday.

Hub cash gas rose to $3.01 just over a week ago, its highest mark - and first time above $3 - since August 2, according to Reuters data. Late deals firmed to even with the front-month October gas futures contract on the New York Mercantile Exchange, from deals done late on Monday at a 1-cent discount.

The daily Hub average remained above the September monthly index of $2.63, but below the year-ago price of $3.30. Hub cash prices peaked last year on June 9 at $4.92.

On NYMEX, the front-month contract traded late up about 4 cents at $2.879. The October contract expires on Wednesday.

In late July, the nearby contract rose to $3.277, its highest mark since December.

In major consumer markets, gas on the Transco pipeline at the New York citygate rose 6 cents on average to $2.99, while Chicago gas was 1 cent lower on the day at $2.95.

On the nuclear front, outages on Tuesday totaled 16,600 megawatts, or 16 percent of U.S. capacity, down slightly from 16,800 MW out on Monday, but up from 10,500 MW out a year ago and a five-year outage rate of about 12,100 MW.

The National Weather Service's six- to 10-day outlook issued on Monday called for normal or below-normal temperatures for about the eastern half of the nation and above-normal readings in the western half.

STOCKS HIGH DESPITE LIGHTER-THAN-NORMAL BUILDS

The U.S. Energy Information Administration last week said domestic gas inventories rose the prior week by 67 billion cubic feet to 3.496 trillion cubic feet.

Most traders viewed the build as neutral, noting it was above Reuters poll estimates for a 64-bcf gain, but below last year's rise of 89 bcf and the five-year average increase for that week of 73 bcf.

Storage now stands 320 bcf, or 10 percent, above the same week in 2011 and 278 bcf, or 9 percent, above the five-year average.

(Storage graphic: link.reuters.com/mup44s)

Record heat this summer has kept weekly storage builds below the seasonal norm in 20 of the last 21 weeks and helped trim a huge storage surplus to last year from its late-March peak near 900 bcf.

But stocks are still at record highs for this time of year and hovering at a level not normally reached until the second week of October. The surplus offers a huge cushion that can help offset any spikes in demand or Gulf Coast supply disruptions from storms.

Traders said autumn injections are poised to pick up as weather loads fade, with early injection estimates for this week's report ranging from 69 bcf to 81 bcf versus a year-earlier build of 104 bcf and the five-year average increase for the week of 76 bcf.

Concerns remain that the inventory overhang will pressure prices this autumn if storage caverns fill to near capacity and back more natural gas into a well-supplied market.

RIGS RISE IN LATEST WEEK, PRODUCTION STILL HIGH

Drilling for natural gas has been in a nearly steady decline for the last 11 months, but the gas-directed rig count rose last week by six to 454, Baker Hughes data showed on Friday. The tally hit a 13-year low the previous week. IDnL1E8KLBJL

While pure gas drilling has become largely uneconomical at current prices, gas produced from more-profitable shale oil and shale gas liquids wells has kept output stubbornly high.

(Rig graphic: r.reuters.com/dyb62s)

Average prices at other spot gas market points and previous day prices follow (US$/mmBtu):

09/25/12 09/24/12

Henry Hub 2.84 2.82

New York citygate 2.99 2.93

Chicago citygate 2.95 2.96

Panhandle (mid-Continent) 2.72 2.70

Northern at Demarcation (Minn.) 2.87 2.89

Southern California border 3.17 3.13

Katy Hub (east Texas) 2.86 2.80

Waha (west Texas) 2.83 2.81

Dominion-South (Appalachia region) 2.84 2.81

Columbia TCO (Appalachia region) 2.87 2.85

For more U.S. Spot Natural Gas prices click on

RELATED LINKS

- Canadian Spot Natural Gas Prices..............

- U.S. Spot Gas versus Oil Comparisons..........

- BTU U.S. Spot Natural Gas Prices..............

- U.S. Nuclear Power Reactor Outage Table ...... <NUKE/>

- North American Power Plant Outage Table ..... <OUTAGES/>

- North American Power Transmission Table .....<TOUTAGES/>

- U.S. EEI Electricity Output Report ........... <EEI/>

- U.S. EEI Electricity Output Table ............

- NYMEX Natural Gas Futures ....................

- NYMEX Crude Oil Futures .......................

(Editing by Dale Hudson)

(eileen.houlihan@thomsonreuters.com, Twitter @eileenreuters; +1 646 223-6074; Reuters Messaging: eileen.houlihan.reuters.com@reuters.net)