* Milder weather on tap for consuming regions
* Upcoming inventory builds should regain momentum
* Nuclear power plant outages could limit losses
* Coming up: Baker Hughes gas drilling rig data Friday
(Adds cash prices, updates futures prices)
By Eileen Houlihan
NEW YORK, Sept 14 (Reuters) - U.S. natural gas futures slid
about 3 percent early on Friday, pressured by forecasts for
milder autumn weather that should curb demand and lead to
increased storage builds in the coming weeks.
Traders said high nuclear power plant outages could help
limit losses, but most expect prices to 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 9:43 a.m. EDT (1343 GMT), front-month October natural
gas futures on the New York Mercantile Exchange were at
$2.944 per mmBtu, down 9.3 cents, or about 3 percent.
The nearby contract peaked at $3.277 in late July, its
highest level since December.
In the cash market, weekend gas bound for the NYMEX delivery
point Henry Hub NG-W-HH in Louisiana was heard early down 6
cents at $2.95 on active volume over 1 billion cubic feet. Early
cash deals were done at 8 cents under the front-month contract,
easing from deals done late Thursday at just a 3-cent discount.
Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 was heard down 12 cents early at $2.97 on volume near
212 million cubic feet.
The National Weather Service's six- to 10-day outlook issued
on Thursday again called for below-normal temperatures for most
of the mid-Continent stretching into the East, and above-normal
readings in the West and in parts of New England and Florida.
On the nuclear front, outages totaled 10,100 megawatts, or
10 percent of U.S. capacity, on Friday, up from 9,100 MW on
Thursday, 7,500 MW out a year ago and a five-year outage rate of
about 8,000 MW.
The U.S. Energy Information Administration on Thursday said
Hurricane Isaac caused "considerable disruption" but little
damage to natural gas processing plants along the U.S. Gulf of
Mexico coast when the storm came ashore three weeks ago.
ANOTHER LIGHT WEEKLY STORAGE BUILD
Isaac shut-in production also led to another light weekly
inventory build. The EIA on Thursday said domestic gas
inventories rose last 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 the Reuters poll estimates for a 28 bcf gain,
many noted it was well below last year's gain of 80 bcf the
five-year average increase for that week of 72 bcf.
Lingering production cuts from Isaac and strong
air-conditioning demand last week slowed the injection. It was
the 19th time in the last 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 noted that 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 next 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 SINK TO 13-YEAR LOW
Traders were waiting for the next Baker Hughes gas drilling
report to be released later Friday. Data last week showed the
number of rigs drilling for natural gas in the United States
slid by 21 to a 13-year low of 452.
(Graphic: r.reuters.com/dyb62s)
The count was down for the 14th time in 16 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.
