March 14, 2012 / 6:28 PM / 5 years ago

U.S. Henry Hub, NY spot gas slip to 30-month lows

* Most prices slip 13 of past 14 sessions
    * Benchmark Henry Hub, NY prices lowest since September 2009
    * Gas futures seesaw after Tuesday's 10-year spot low
    * Coming Up: EIA natgas storage data Thursday

    By Eileen Houlihan	
    NEW YORK, March 14 (Reuters) - U.S. spot natural gas
prices fell across the nation again on Wednesday, with benchmark
Henry Hub gas in Louisiana and regional prices in New York
slipping to their lowest marks in more than two years.	
    Henry Hub gas prices have fallen nearly 13 percent so far
this month, pressured by mild late-winter weather that has
curbed heating demand and swelled inventories.	
    Gas bound for the U.S. benchmark Henry Hub NG-W-HH slid 2
cents on average to $2.13 per million British thermal units, its
lowest price since September 2009, according to Reuters data.	
    Hub cash gas also fell 2 cents on Tuesday for gas delivered
on Wednesday, and is down nearly $2.80, or 57 percent, from its
2011 high of $4.92 hit during a heatwave in June.	
    Hub cash prices have not been over $4 since mid-September
and have not broken above $3 this year.	
    Early Hub cash deals eased to about 15 cents under the front
month April futures contract on the New York Mercantile Exchange
, from deals done late Tuesday at about a 9-cent discount.	
    Wednesday's daily Hub average remained below the March
monthly index of $2.42 and the year-ago price of $3.90.	
    On NYMEX, the front month contract traded late near flat on
the day at $2.295, after sliding Tuesday to $2.204, the lowest
price for a front month since February 2002.	
    In major consuming markets, gas for Thursday delivery on the
Transco pipeline at the New York city gate NG-NYCZ6 fell 4
cents on average to $2.22, also its lowest price since September
2009, while Chicago gas NG-CHGC was 1 cent lower on the day at
$2.11.	
    Temperatures in both key gas-consuming cities were seen in
the low-60s to mid-70s degrees Fahrenheit for the next several
days, according to the Weather Channel's weather.com.	
    The National Weather Service six to 10-day outlook issued on
Tuesday again called for above or much-above-normal readings for
about the eastern two-thirds of the nation and below-normal
readings only in the West.	
    	
    STORAGE OVERHANG A PROBLEM FOR PRICES	
    Last week's gas storage report from the U.S. Energy
Information Administration showed total domestic inventories
fell to 2.433 trillion cubic feet, still at record highs for
this time of year, and more than 700 bcf, or 40 percent, above
both last year and the five-year average level. 	
    (Storage graphic: link.reuters.com/mup44s)	
    Withdrawal estimates for this week's EIA report ranged from
45 bcf to 73 bcf, with most traders and analysts expecting data
will show a draw of about 57 bcf when it is released early
Thursday, a Reuters poll showed. 	
    Stocks fell an adjusted 60 bcf in the same week last year,
and on average over the past five years have dropped 79 bcf that
week.	
    With no extreme cold on the horizon, stocks are likely to
end winter at an all-time high of 2.2 tcf, well above the
previous record of 2.148 tcf set in 1983.	
    The cushion could also spell 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 19,600
megawatts, or 20 percent, on Wednesday, up from 15,800 MW out a
year ago and a five-year outage rate of about 15,200 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.	
    But with production still running at or near all-time highs,
 few traders expect much upside in prices in the near term.	
     	
    MORE FUNDAMENTALS	
    Baker Hughes drilling data last week showed the gas-directed
rig count fell for a ninth straight week to a 32-month low of
670. 	
    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 plays still
produces plenty of associated gas that partly offsets any
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.	
    Most analysts, noting it will be difficult to balance the
gas market without serious production cuts, do not expect any
major slowdown in gas output until late this year.	
            	
    Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu)  	
                                     03/14/12        03/13/12 	
  Henry Hub                            2.13            2.15 	
  New York city gate                   2.22            2.26 	
  Chicago city gate                    2.11            2.12 	
  Panhandle (Mid-continent)            1.92            1.92 	
  Northern at Demarcation  (Minn.)     1.96            1.93 	
  Southern California Border           2.23            2.20 	
  Katy Hub (East Texas)                2.03            2.05 	
  Waha (West Texas)                    2.02            2.04 	
  Dominion-South (Appalachia region)   2.08            2.12 	
  Columbia TCO (Appalachia region)     2.06            2.12 	
     	
    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 Marguerita Choy)

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