RTRS: UPDATE 1-US gas futures slip 2 pct, remain under recent 2012 high
* Front month hovers below Monday's 2012 peak
* Nuclear power plant outages remain strong
* Cooler weather on tap in longer-term outlooks
* Coming up: EIA oil data Wednesday, EIA gas data Thursday
(Recasts, adds cash prices, updates futures prices)
By Eileen Houlihan
NEW YORK, Oct 24 (Reuters) - U.S. natural gas futures slid
about 2 percent early on Wednesday, with near-term mild weather
and concerns over record-high inventories slightly outweighing
the large number of nuclear power plant outages.
The nearby contract had rebounded on Tuesday from a 5
percent slide the prior day, after profit-taking when futures
rose to their highest level of the year.
Despite strong technical gains this month, many traders
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 9:57 a.m. EDT (1357 GMT), front-month November natural
gas futures on the New York Mercantile Exchange were at
$3.47 per mmBtu, down 6.5 cents, or nearly 2 percent.
Futures rose early 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 up 9 cents at
$3.43 on light volume near 511 million cubic feet.
Early deals also firmed to just 2 cents under the
front-month contract, from deals done late on Tuesday at a
15-cent discount.
Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 was heard up 10 cents at $3.59 on volume near 159
mmcf.
The National Weather Service's six- to 10-day outlook issued
on Tuesday again 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 26,500
megawatts, or 26 percent of U.S. capacity, up slightly from
26,200 MW out on Tuesday, 21,000 MW out a year ago and a
five-year outage rate of about 22,500 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, which is 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
Data from Baker Hughes 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.
