RTRS: U.S. natgas futures little changed before storage data
(Reuters) - U.S. natural gas futures traded flat in early Thursday activity, as the market awaited weekly inventory data for more direction.
Nearby futures ended higher on Wednesday, backed by expectations for a light storage build, after two straight losses due to mild autumn weather blanketing much of the country.
Most traders and analysts expect the data from the U.S. Energy Information Administration to show a build of about 48 billion cubic feet when released at 10:30 a.m. EDT (1430 GMT), a Reuters poll showed.
Stocks rose by an adjusted 106 bcf in the same week last year, and on average over the past five years have gained 71 bcf that week.
Last week, the front-month contract rose to its highest level of the year.
Sizable outages at nuclear plants have helped support prices, but many traders remain concerned that gas priced above $3 per million British thermal units will continue to lose market share to coal for power generation.
As of 9:35 a.m. EDT (1335 GMT), front-month November natural gas futures on the New York Mercantile Exchange traded at $3.465 per mmBtu, down 0.5 cent. The contract rose as high as $3.638 on Friday, its loftiest mark since early December.
In the cash market, gas bound for the NYMEX delivery point Henry Hub in Louisiana was heard early up 4 cents at $3.28 on active volume near 809 million cubic feet.
Early deals were done at a 16-cent discount to the front-month contract, little changed from deals done late on Wednesday at a 14-cent discount.
Gas on the Transco pipeline at the New York citygate was heard up 5 cents at $3.48 on volume near 141 mmcf.
The National Weather Service's six- to 10-day outlook issued on Wednesday again called for above-normal temperatures for more than the eastern half of the nation and normal or below-normal readings only in the West.
On the nuclear front, outages totaled about 24,200 megawatts, or 24 percent of U.S. capacity, down slightly from 24,600 MW out on Wednesday, but up from 17,500 MW out a year ago and a five-year outage rate of about 21,400 MW. [ID:nL3E8LI540]
INVENTORIES STILL HIGH
Last week's EIA gas storage report showed that domestic gas inventories rose the prior week by 72 bcf to 3.725 trillion cubic feet.
Storage stands nearly 7 percent above last year's levels and nearly 8 percent above the five-year average.
(Storage graphic: link.reuters.com/mup44s)
Inventories are at record highs for this time of year and are likely to end the stock-building season above last year's all-time peak of 3.852 tcf.
Storage, now 88 percent full, is at a level that exceeds the average peak for the year of about 3.7 tcf typically hit in early November. Without some unseasonably cold weather this month, stocks are likely to grow for four or five more weeks.
PRODUCTION STRONG BUT RIG COUNT, DRILLING LOWER
Data from Baker Hughes last week showed the gas-directed rig count slid by 15 to a 13-year low of 422.
(Rig graphic: r.reuters.com/dyb62s)
The count is down 55 percent since peaking at 936 last October.
Drilling for natural gas has been in a near-steady decline for the last year, but so far production has shown no significant sign of slowing.
While dry gas drilling has become largely uneconomical at current prices, gas produced from more-profitable shale oil and shale gas liquids wells has kept output near record highs.
