March 20, 2012 / 6:57 PM / 6 years ago

Outages, futures lift US spot natgas for second day

* Prices rise across nation after 2 weeks of losses
    * Henry Hub, NY prices climb from last week's 30-mth lows
    * Gas futures mostly higher after last week's 10-yr spot low
    * Coming Up: API oil data Tuesday, EIA oil data Wednesday

    By Eileen Houlihan	
    NEW YORK, March 20 (Reuters) - U.S. spot natural gas prices
rose across the nation for a second straight day on Tuesday
after more than two weeks of losses at many locations.	
    Two days of gains in the gas futures market, a high number
of nuclear power plant outages and some storage buying all
helped lift prices after benchmark Henry Hub gas in Louisiana
and regional New York prices fell last week to more than
two-year lows, traders said.	
    Gas bound for the U.S. benchmark Henry Hub NG-W-HH rose 5
cents on average to $2.19 per million British thermal units,
after rising 13 cents on Monday for gas delivered on Tuesday.	
    Hub cash gas had fallen Friday to $2.01, its lowest price
since September 2009, according to Reuters data.	
    But Hub prices are still down nearly $2.75, or 56 percent,
from their 2011 high of $4.92, which was set during a June heat
wave.	
    Hub cash prices have not been over $4 since mid-September
and have not broken above $3 this year.	
    Late Hub cash deals firmed slightly to about 15 cents under
the front-month April futures contract on the New York
Mercantile Exchange, from deals done late Monday at about
a 20-cent under.	
    Tuesday's daily Hub average remained below the March monthly
index of $2.42 and the year-ago price of $3.99.	
    On NYMEX, the front month contract traded late up less than
1 cent at $2.352, after rising as high as $2.369.	
    In major consuming markets, gas for Wednesday delivery on
the Transco pipeline at the New York city gate NG-NYCZ6 rose 4
cents on average to $2.31, also climbing from last week's drop
to its lowest price since September 2009, while Chicago gas
NG-CHGC was 6 cents higher on the day at $2.21.	
    Temperatures in both key gas-consuming cities were seen
climbing into the high 70s or low-80s degrees Fahrenheit this
week, according to the Weather Channel's weather.com.	
    The National Weather Service six- to 10-day outlook issued
on Monday again called for above or much-above-normal readings
for more than the eastern two-thirds of the nation and
below-normal readings only on the West Coast.	
    	
    STORAGE OVERHANG A PROBLEM FOR PRICES	
    Last week's storage report from the U.S. Energy Information
Administration showed total domestic gas inventories fell to
2.369 trillion cubic feet, but remain 45 percent above year-ago
levels and nearly 52 percent above the five-year average.
 	
    (Storage graphic: link.reuters.com/mup44s)	
    With extremely warm weather across much of the nation last
week, most traders expect this week's EIA report to show an
early injection into storage.	
    Early estimates for this week's EIA report range from a draw
of 2 bcf to a build 16 bcf, versus a year-ago adjusted decline
of 20 bcf and a five-year average drop for that week of 17 bcf.	
    Storage is likely to finish the month at a new all-time high
over 2.4 tcf, 55 percent above normal and well above the
previous record of 2.148 tcf set in 1983.	
    The cushion could spell more trouble for prices late in the
summer stock-building season if storage caverns fill to capacity
and force more supply into the market.	
    	
    OUTAGES, CUTS COULD HELP TIGHTEN MARKET	
    Nuclear plant outages were running at about 20,900
megawatts, or 21 percent, on Tuesday, up from 16,700 MW out a
year ago and a five-year outage rate of about 16,200 MW.
 	
    Traders said the outages could add more than 1 bcf to daily
gas demand.	
    And planned output cuts by producers could trim 1 bcf per
day or more from flowing supply. 	
    Relatively cheap gas has also drawn more industrial use and
prompted additional utility fuel switching away from more
expensive coal.	
     	
    MORE FUNDAMENTALS	
    Baker Hughes drilling data last week showed the gas-directed
rig count fell for a 10th straight week to a 10-year low of 663.
 	
    The steady drop in gas-directed drilling has stirred talk
that low prices might finally slow output.	
    (Rig graphic: r.reuters.com/dyb62s)	
    Analysts agree it can take months for a slowdown in drilling
to translate into lower production, noting the producer shift in
spending to higher-value oil and gas liquids still produces
plenty of associated gas that partly offsets reductions in dry
gas output.	
    A recent Bernstein report said the gas-directed rig count
would have to drop to about 600 before it would be comfortable
forecasting flat to falling production, but some traders think
that number is still too high.	
    	
    Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu)  	
                                     03/20/12        03/19/12 	
  Henry Hub                            2.19            2.14 	
  New York city gate                   2.31            2.27 	
  Chicago city gate                    2.21            2.15 	
  Panhandle (Mid-continent)            2.05            2.01 	
  Northern at Demarcation  (Minn.)     2.08            2.03 	
  Southern California Border           2.46            2.36 	
  Katy Hub (East Texas)                2.12            2.08 	
  Waha (West Texas)                    2.14            2.09 	
  Dominion-South (Appalachia region)   2.18            2.13 	
  Columbia TCO (Appalachia region)     2.18            2.13 	
     	
    For more U.S. Spot Natural Gas prices click on <0#NG-US> 	
     	
    RELATED LINKS 	
    - Canadian Spot Natural Gas Prices..............<0#NG-CA> 	
    - U.S. Spot Gas versus Oil Comparisons.......... 	
    - BTU U.S. Spot Natural Gas Prices..............<0#NG-BTU> 	
    - U.S. Nuclear Power Reactor Outage Table ...... 	
    - North American Power Plant Outage Table ..... 	
    - North American Power Transmission Table ..... 	
    - U.S. EEI Electricity Output Report ........... 	
    - U.S. EEI Electricity Output Table ............ EEI- 	
    - NYMEX Natural Gas Futures .................... <0#NG:> 	
    - NYMEX Crude Oil Futures .......................<0#CL:> 	
	
 (Reporting by Eileen Houlihan; Editing by Bob Burgdorfer)

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