RTRS: UPDATE 1-U.S. natgas futures slide on mild weather outlook
* Mild autumn weather on tap for most of the nation
* High nuclear plant outages could limit losses
* Coming up: API oil data Tuesday, EIA oil data Wednesday
(Adds cash prices, analyst quote, updates futures prices)
By Eileen Houlihan
NEW YORK, Sept 24 (Reuters) - U.S. natural gas futures edged
lower early on Monday, extending last week's 2 percent slide as
a forecast for mild autumn weather was expected to curb power
demand.
"Weekend weather updates generally favor seasonally mild
temperature trends that now extend out through the first week of
October," said Jim Ritterbusch, president of Ritterbusch &
Associates in a morning report.
Some traders said high nuclear power plant outages could
help limit the downside as utilities replace the lost generation
with gas.
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 9:41 a.m. EDT (1341 GMT), front-month October natural
gas futures on the New York Mercantile Exchange were at
$2.825 per mmBtu, down 6 cents, or about 2 percent.
The nearby contract peaked at $3.277 in late July, its
highest level since last December.
In the cash market, however, gas bound for the NYMEX
delivery point Henry Hub NG-W-HH in Louisiana was heard early
up 6 cents at $2.82 on volume near 649 million cubic feet.
Early deals also firmed to just 2 cents under the
front-month contract, from deals done late Friday at a 10-cent
discount.
Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 was heard up 9 cents early at $2.93 on volume near
179 mmcf.
The National Weather Service's six- to 10-day outlook issued
on Sunday called for normal or above-normal readings for most of
the nation, with some below-normal temperatures only in the
Southeast.
On the nuclear front, outages on Monday totaled 16,800
megawatts, or 17 percent of U.S. capacity, down from 17,700 MW
out on Friday, but up from 10,800 MW out a year ago and a
five-year outage rate of about 12,400 MW.
STOCKS HIGH DESPITE LIGHTER-THAN-NORMAL BUILDS
The U.S. Energy Information Administration last week said
domestic gas inventories rose the prior 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 rise 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.
(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 compared 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 this
week's report ranging from 69 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 RISE IN LATEST WEEK, PRODUCTION STILL HIGH
Drilling for natural gas has been in a nearly steady decline
for the last 11 months, but the gas-directed rig count rose last
week by six to 454, after falling to a 13-year low of 448 the
previous week, according to data from Baker Hughes on Friday.
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)
