RTRS: US natgas futures edge higher for second straight day
* High nuclear plant outages seen boosting near-term demand
* Milder autumn weather on tap for consuming regions
* Coming up: Baker Hughes gas-drilling rig data Friday
By Eileen Houlihan
NEW YORK, Sept 21 (Reuters) - U.S. natural gas futures edged
up early on Friday, extending gains for a second straight day
amid a high number of nuclear power plant outages ahead of the
weekend.
Most traders said the market had become slightly oversold,
after sliding about 10 percent in the five sessions through
Wednesday.
But most agree prices will have a hard time breaking back
above $3 per million British thermal units, the level at which
gas tends to lose market share over coal for power generation.
As of 9:16 a.m. EDT (1316 GMT), front-month October natural
gas futures on the New York Mercantile Exchange fetched
$2.828 per mmBtu, up 3.1 cents, or about 1 percent.
The nearby contract peaked at $3.277 in late July, its
highest level since last December.
The National Weather Service's six- to 10-day outlook issued
on Thursday called for below-normal temperatures for about the
eastern third of the nation, above-normal readings in much of
the western half, and a large swath of normal readings across
much of the mid-Continent.
On the nuclear front, outages on Friday totaled 17,700
megawatts, or 18 percent of U.S. capacity, up from 15,400 MW out
on Thursday, 10,500 MW out a year ago and a five-year outage
rate of about 13,800 MW.
STOCKS HIGH DESPITE LIGHTER-THAN-NORMAL BUILDS
The U.S. Energy Information Administration on Thursday said
domestic gas inventories rose last week by 67 billion cubic feet
to 3.496 trillion cubic feet.
Most traders viewed the build as neutral, noting it was
above Reuters poll estimates for a 64-bcf gain, but below last
year's gain of 89 bcf and the five-year average increase for
that week of 73 bcf.
Storage now stands 320 bcf, or 10 percent, above the same
week in 2011 and 278 bcf, or 9 percent, above the five-year
average level.
(Storage graphic: link.reuters.com/mup44s)
Record heat this summer has kept weekly storage builds below
the seasonal norm in 20 of the last 21 weeks and helped trim a
huge storage surplus to last year from its late-March peak near
900 bcf.
But stocks are still at record highs for this time of year
and hovering at a level not normally reached until the second
week of October. The surplus offers a huge cushion that can help
offset any spikes in demand or Gulf Coast supply disruptions
from storms.
Traders said autumn injections are poised to pick up as
weather loads fade, with early injection estimates for next
week's report ranging from 72 bcf to 83 bcf versus a
year-earlier build of 104 bcf and the five-year average increase
for the week of 76 bcf.
Concerns remain that the inventory overhang will pressure
prices this autumn if storage caverns fill to near capacity and
back more natural gas into a well-supplied market.
RIGS DECLINE, PRODUCTION STILL HIGH
Traders were waiting for the next Baker Hughes drilling rig
report to be released later on Friday.
Drilling for natural gas has been in a nearly steady decline
for the last 11 months, with the gas-directed rig count falling
to a 13-year low of 448 last week, but so far output shows few
signs of slowing.
While pure gas drilling has become largely uneconomical at
current prices, gas produced from more profitable shale oil and
shale gas liquids wells has kept output stubbornly high.
(Rig graphic: r.reuters.com/dyb62s)
