May 30, 2012 / 5:58 PM / 5 years ago

REFILE-US spot natgas down again; cooler weather forecast

(Refiles, deletes repeated section)	
    * All price points down on moderating weather
    * Cooler weather expected later in the week
    * Futures down for fourth straight session

    NEW YORK, May 30 (Reuters) - U.S. spot natural gas prices
fell across the board on Wednesday on the promise of cooler
weather in key consuming regions and as futures contracts slid
further.	
    Gas for Thursday delivery at Henry Hub NG-W-HH, a key
supply point in Louisiana, fell 11 cents to $2.39 per million
British thermal units, a third straight session of losses after
hitting a three-month high of $2.66 last Thursday.	
    Hub differentials to futures firmed to 1 cent over NYMEX
from a 1 cent discount on Tuesday.	
    The daily Hub average is above the May monthly index of
$2.03 but well below the year-ago price of $4.63 and the $4.39
mean on the same day in 2010.	
    In major consumer markets, day-ahead prices on Transco
pipeline at the New York City gate NG-NYCZ6 fell 14 cents to
$2.59 as cooler weather late week reduced anticipated air
conditioning demand. Chicago NG-CHGC was 7 cents lower at
$2.47.	
    Cash prices failed to find support from futures which fell
on Wednesday for a fourth straight session. As of 1:37 p.m. EDT,
front-month July natural gas futures on the New York Mercantile
Exchange, were at $2.447 per million British thermal
units, down nearly 4 cents.	
    The June contract went off the board down more than 5
percent on Tuesday in the biggest one-day slide in nearly three
months, and futures fell more than 11 percent in the largest
three-day drop in nearly four months.	
    The front month hit a 3-1/2 month high of $2.759 on May 18
before losing more than 6 percent last week, its biggest weekly
decline in two months, in part due to weather but also as
utilities switched back to using cheap coal for power
generation.	
	
    STORAGE STILL AT RECORD	
    U.S. Energy Information Administration data last week showed
domestic gas inventories rose 77 billion cubic feet to 2.744
trillion cubic feet. (Graphic: link.reuters.com/mup44s
 )  	
    The weekly build trimmed the surplus to last year to 750
bcf, or 38 percent, and cut the excess versus the five-year
average to 753 bcf, or also 38 percent.    	
    The surplus to last year has dropped 15 percent from
late-March highs, but stocks remain at record highs for this
time of year. Concerns remain that the glut will drive prices
lower this summer as storage caverns fill.	
    Injection estimates for this week's EIA storage report
ranged from 59 bcf to 82 bcf, with most traders and analysts
expecting data will show a build of about 70 bcf when it is
released on Thursday, a Reuters poll showed. 	
    Stocks rose an adjusted 89 bcf in the same week last year,
while the five-year average build for that week is 100 bcf.	
    Weekly inventory builds have fallen below average in six of
the last seven weeks, but traders said more undersized builds
will be needed to trim the overhang to more manageable levels in
the 175 days or so left before winter withdrawals begin.	
    The storage surplus to last year will have to be cut by at
least another 500 bcf to avoid breaching the government's
4.1-tcf estimate of capacity. Stocks peaked last year in
November at a record high of 3.852 tcf.	
     	
    PRODUCTION NEAR RECORD	
    Despite declines in dry gas drilling and planned output cuts
by several key producers, gas production is still flowing at
near-record highs. 	
    Announced cuts so far have slowed output by less than 1 bcf
per day, or just a little over 1 percent, not enough to make a
real dent in a seriously oversupplied gas market.	
    Baker Hughes data last week showed the gas-directed rig
count fell by six to a 10-year low of 594. The near 37 percent
drop in dry gas drilling since peaking at 936 in October has
stirred talk that producers were finally getting serious about
stemming the flood of supplies.	
    But the shift away from dry gas to higher-value shale oil
and shale gas liquid plays still produces plenty of associated
gas that ends up in the market after processing. That has slowed
the overall drop in dry gas output. (Graphic: r.reuters.com/dyb62s
 )	
	
    MORE FUNDAMENTALS	
    The National Weather Service's six- to 10-day outlook issued
on Tuesday called for above-normal readings for about the
eastern two-thirds of the nation and normal or below-normal
readings only on the West Coast.	
    But some private forecasters, including MDA EarthSat, were
calling for cooler weather in the Midwest to Northeast over the
same time frame.	
    Nuclear power plant outages were running at about 17,400
megawatts, or 17 percent, on Wednesday, down from about 21,300
MW out a year ago but up from a five-year outage rate of about
13,100 MW. 	
    Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu):  	
                                    05/30/12            05/29/12
        	
  Henry Hub                           2.39                2.50  
          	
  New York city gate                  2.59                2.73  
          	
  Chicago city gate                   2.47                2.54  
          	
  Panhandle (Mid-continent)           2.33                2.40  
          	
  Northern at Demarcation  (Minn.)    2.41                2.49  
          	
  Southern California Border          2.49                2.58  
          	
  Katy Hub (East Texas)               2.41                2.51  
          	
  Waha (West Texas)                   2.40                2.48  
          	
  Dominion-South (Appalachia region)  2.42                2.54  
          	
  Columbia TCO (Appalachia region)    2.43                2.55  
          	
     	
    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 Edward McAllister; Editing by David Gregorio)

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