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U.S. natgas futures slip 2 pct despite weekday demand
September 17, 2012 / 1:37 PM / 5 years ago

U.S. natgas futures slip 2 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

    By Eileen Houlihan
    NEW YORK, Sept 17 (Reuters) - U.S. natural gas futures slid
2 percent early 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, the level at which
gas tends to lose much of its appeal over coal for power
generation.
    As of 9:23 a.m. EDT (1323 GMT), front-month October natural
gas futures on the New York Mercantile Exchange were at
$2.887 per mmBtu, down 5.6 cents, or nearly 2 percent.
    The nearby contract peaked at $3.277 in late July, its
highest level since December.
    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, noting it
was 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 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 level, 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 was down 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.
    

 (Reporting by Eileen Houlihan; editing by John Wallace)

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