RTRS: UPDATE 1-U.S. natgas futures up 3 pct early at fresh 2012 high
* Front month at highest mark since December 2011
* High nuclear plant outages boost near-term demand
* Cooler weather on tap for much of the nation
* Coming up: API oil data Tuesday, EIA oil data Wednesday
(Adds cash prices, updates futures prices)
By Eileen Houlihan
NEW YORK, Oct 1 (Reuters) - U.S. natural gas futures rose
more than 3 percent early on Monday, lifted to their highest
mark this year amid forecasts for cooler weather in the coming
days and strong nuclear power plant outages.
The front month contract is up for a fifth straight session,
gaining 17 percent in the past four.
For September, the nearby contract posted a nearly 19
percent rise, the biggest monthly gain in three years.
But many traders remained concerned that with prices above
$3 per million British thermal units, natural gas w ill continue
to lose market share from coal for power generation.
As of 9: 4 6 a.m. EDT (13 4 6 GMT), front-month November natural
gas futures on the New York Mercantile Exchange were at
$3.425 p er mmBtu, up 10.5 c ents, or just over 3 percent. The
contract rose as high as $3.435, its highest mark since last
December.
In the cash market, gas bound for the NYMEX delivery point
Henry Hub NG-W-HH in Louisiana was heard early up 1 2 cents a t
$ 3.20 on volume near 66 0 m illion cubic feet.
Early deals were done at a 24-cent discount to the front
month contract.
Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 was heard u p 16 cents at $3.3 5 on volume near 29 5
m mcf.
The latest National Weather Service's six- to 10-day outlook
issued on Sunday called for below or much-below-normal
temperatures for nearly the entire nation.
On the nuclear front, outages on Monday totaled 15,500
megawatts, or 15 percent of U.S. capacity, down slightly from
16,500 MW out on Friday, but up from 14,400 MW out a year ago
and a five-year outage rate of about 14,300 MW.
STORAGE SURPLUS SHRINKS
Last week's gas storage report from the U.S. Energy
Information Administration showed total domestic gas inventories
rose the previous week by 80 billion cubic feet to 3.576
trillion cubic feet. It was the biggest weekly injection so far
this year.
Record heat this summer helped trim a huge storage surplus
to last year from its late-March high near 900 bcf, but traders
expect builds to continue to pick up as weather loads fade.
Total domestic gas inventories are still at record highs for
this time of year and likely to end the stock building season
above last year's all-time high of 3.852 trillion cubic feet.
(Storage graphic: link.reuters.com/mup44s)
At 82 percent full, total stocks hovered at levels not
normally reached until the second week of October and still
offered a huge cushion that can help offset any weather-related
spikes in demand or supply disruptions from storms.
Early injection estimates for this week's EIA report range
from 55 bcf to 81 bcf versus a year-earlier build of 101 bcf and
the five-year average increase for the week of 78 bcf.
RIGS DECLINE, PRODUCTION STUBBORNLY HIGH
Drilling for natural gas has been in a nearly steady decline
for the last 11 months, sliding 19 last week to a 13-year low of
435, Baker Hughes data showed.
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)
EIA gross natural gas production data on Friday showed that
July output climbed 0.4 percent from June to 72.58 bcf per day,
not far below January's record high of 72.74 bcfd.
