RTRS: UPDATE 1-US natgas futures edge higher after Monday's big loss
* Front month below Monday's 2012 high
* Nuclear power plant outages remain strong
* Cool weather on tap in longer-term outlooks
* Coming up: API oil data Tuesday, EIA oil data Wednesday
(Adds cash prices, updates futures prices)
By Eileen Houlihan
NEW YORK, Oct 23 (Reuters) - U.S. natural gas futures edged
higher early on Tuesday, with cooler weather in long-term
outlooks and nuclear plant outages supporting prices despite
some big losses the previous day.
Early on Monday, the nearby contract rose to its highest
level of the year before ending the trading day down about 5
percent.
While most traders expect the cooler forecasts to limit the
downside, others remain concerned that gas priced at well above
$3 per million British thermal units will continue to lose
market share to coal for power generation.
As of 9:37 a.m. EDT (1337 GMT), front-month November natural
gas futures on the New York Mercantile Exchange were at
$3.467 per mmBtu, up 1.5 cents. They climbed on Monday to
$3.648, the highest price for a spot contract since early
December, according to Reuters data.
In the cash market, gas bound for the NYMEX delivery point
Henry Hub NG-W-HH in Louisiana was heard early down 15 cents
at $3.34 on light volume near 529 million cubic feet.
Early deals were done at 11 cents under the front-month
contract, little changed from deals done late on Monday at a
13-cent discount.
Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 was heard down 13 cents at $3.48 on volume near 182
mmcf.
The National Weather Service's six- to 10-day outlook issued
on Monday called for below-normal temperatures for about the
eastern half of the country, with above-normal readings only on
the West Coast and in a small portion of New England.
On the nuclear front, outages totaled about 26,200
megawatts, or 26 percent of U.S. capacity, up from 25,700 MW out
on Monday, 19,500 MW out a year ago and a five-year outage rate
of about 21,500 MW.
RECORD INVENTORIES
Last week's gas storage report from the U.S. Energy
Information Administration showed domestic inventories rose the
prior week by 51 billion cubic feet to 3.776 trillion cubic
feet.
Stocks remain 5 percent above year-ago levels and more than
7 percent above the five-year average.
(Storage graphic: link.reuters.com/mup44s)
While a huge inventory surplus, which peaked in late March
at nearly 900 bcf, has been cut by 80 percent, inventories are
still at record highs for this time of year.
At 89 percent full, stocks are already above the average
peak for the year of 3.7 tcf usually hit in early November.
Without some unseasonably cold weather soon, stocks are
likely to grow for three or four more weeks and easily end the
injection season above last year's all-time high of 3.852 tcf.
Early injection estimates for this week's EIA report range
from 55 bcf to 77 bcf versus a year-earlier build of 95 bcf and
the five-year average increase for that week of 65 bcf.
RIG COUNT EDGES HIGHER
Baker Hughes data on Friday showed the gas-drilling rig
count had risen by five to 427, from a 13-year low the previous
week.
(Rig graphic: r.reuters.com/dyb62s)
The count is down 54 percent since peaking at 936 last
October, with the decline feeding expectations that producers
were getting serious about stemming record supplies.
But so far, there is little evidence that gas output is
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.
