RTRS: US natgas futures drop 3 pct after six straight winning sessions
* Front month below Tuesday's 2012 high
* Nuclear power plant outages still strong
* Cooler weather on tap for much of the country
* Coming up: EIA oil data Wednesday, EIA gas data Thursday
By Eileen Houlihan
NEW YORK, Oct 3 (Reuters) - U.S. natural gas futures slid
n early 3 pe rcent early W ednesday a mid p rofit-taking a fter
gaining more than 24 percent ov er s ix straight wi nning se ssions.
On Tuesday the front - month contract rose to its highest mark
this year a mid forecasts for cooler weather in the coming days
and strong nuclear power plant outages.
But many traders remained concerned that gas priced at well
above $3 per million British thermal units will continue to lose
market share to coal for power generation.
Still, producers that shut in wells when prices fell easily
below $3 could again be tempted to hook up wells that had been
drilled but not flowing.
As of 9: 11 a.m. EDT (13 11 GMT), front-month November natural
gas futures on the New York Mercantile Exchange were at
$3.437 p er mmBtu, down 9. 4 c ents, or ne arly 3 per cent. The
contract rose as high as $3.546 on Tuesday, i ts bes t mark since
last December.
The National Weather Service's six- to 10-day outlook issued
on T uesd ay again called for t emperatures b elow normal or much
b e low n o rmal for nearly the entire nation, with normal or
above-normal readings only in the West and south Texas.
On the nuclear front, outages on Wednes day totaled 15, 9 00
megawatts, or 16 percent of U.S. capacity, u p from 15,2 0 0 MW out
on Tu esda y, 13, 8 0 0 MW out a year ago and a five-year outage rate
of about 15,3 0 0 MW.
STORAGE BUILDS PICK UP, STOCKS AT RECORD HIGHS
Last week's gas storage report from the U.S. Energy
Information Administration (EIA) showed domestic gas inventories
rose in 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
relative to last year from its late-March high near 900 bcf, but
traders expected builds to continue to pick up as weather loads
fade.
Domestic gas inventories are still at record peaks 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.
At 82 percent full, 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 75 bcf versus a year-earlier build of 101 bcf and
the five-year average increase for the week of 78 bcf.
RIGS DECLINE, PRODUCTION STILL HIGH
Drilling for natural gas has been in a nearly steady decline
for the last 11 months, sliding by 19 rigs last week to a
13-year low of 435, Baker Hughes data showed.
But 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.
EIA gross natural gas production data on Friday showed 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.
