CORRECTED-UPDATE 3-U.S. natgas futures end higher, hit 3-month high

Wed Mar 13, 2013 8:42pm GMT

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(Corrects 8th paragraph to show open interest not at record)
    * Front month hits highest mark since early December
    * Nuclear outages still running above normal
    * Mixed weather outlooks, some mild temperatures on tap
    * Coming Up: EIA natgas storage data on Thursday

    By Eileen Houlihan
    NEW YORK, March 13 (Reuters) - U.S. natural gas futures
ended higher on Wednesday, after climbing early to a three-month
spot chart high amid continued technical buying and some cold
weather expected to return to consuming regions of the nation
late this week and next.
    "The natural gas market continues to inch higher, supported
by a temperature outlook featuring cooler-than-normal
temperatures through the end of March," said Tim Evans, energy
specialist with Citi Futures in New York.
    In addition, above-normal nuclear power plant outages and
expectations for another above-average weekly inventory
withdrawal kept momentum to the upside.
    Most agreed the chart picture remained supportive, with the
nearby contract breaking through some key resistance levels on
its nearly 18 percent run up from the five-week low of $3.125
per million British thermal units hit in mid-February.
    Front-month April natural gas futures on the New York
Mercantile Exchange rose 3.5 cents, or just under 1
percent, to settle at $3.68 per mmBtu.
    The nearby contract rose as high as $3.696 in electronic
trade, its highest price since early December, according to
Reuters data.
    Other months ended higher as well, with the May contract
 rising 3.4 cents to $3.718 and summer months gaining
about 3 cents each.
    Natural gas futures open interest, or the number of longs or
shorts outstanding, climbed 9,008 contracts on Tuesday to
1,272,844, up for a ninth straight session but failing to
eclipse the prior benchmark high of 1,308,114 set in April 2012,
CME data showed on Wednesday. 
    In the cash market, gas for Thursday delivery at the NYMEX
benchmark Henry Hub NG-W-HH in Louisiana rose 1 cent to a
3-1/2-month high of $3.72, with late deals easing slightly to 5
cents over the front month, from deals done late Tuesday at a
7-cent premium.
    Gas on the Transco pipeline at the New York citygate
NG-NYCZ6 rose 15 cents to $4.15.
    Forecaster MDA Weather Services called for warmth to build
in the western United States in its one to five-day outlook, but
some below-normal temperatures were seen lingering in the East.
    The latest National Weather Service six to 10-day forecast
issued on Tuesday also called for below-normal temperatures in
most of the West and normal or above-normal for much of the
East.
    Nuclear outages totaled about 17,400 megawatts, or 17
percent of U.S. capacity, up from 16,500 MW out on Tuesday and a
five-year average outage rate of about 15,900 MW, but down from
19,600 MW out a year ago. 
    
    ANOTHER ABOVE-AVERAGE STORAGE DRAW
    U.S. Energy Information Administration data last week showed
domestic gas inventories fell the prior week by 146 billion
cubic feet to 2.083 trillion cubic feet. 
    Most traders viewed the decline as supportive, noting it was
the third straight week that the draw came in above
expectations. A Reuters poll showed traders and analysts had
forecast a 134 bcf drop.
    The draw was also well above the 92 bcf pull seen during the
same week last year and the five-year average drop of 107 bcf
for that week.    
    Storage is now 361 bcf, or 15 percent, below last year's
record highs for this time of year, but it is also 269 bcf, or
15 percent, above the five-year average level.
    (Storage graphic: link.reuters.com/mup44s)    
    Withdrawal estimates for this week's EIA inventory report
ranged from 115 bcf to 147 bcf, with most traders and analysts
expecting stocks to show a drop of about 134 bcf when data is
released early Thursday, a Reuters poll showed. 
    Storage fell an adjusted 66 bcf during the same week in 2012
and the five-year average decline for that week is 74 bcf.
    A string of strong weekly withdrawals has prompted analysts
to sharply lower estimates for end-winter storage, with some
expecting inventories to drop to as low as 1.8 tcf, or about 4
percent above average.
    A Reuters poll in mid-January showed most analysts had
expected stocks to finish the heating season at about 2 tcf.
    So far this winter, nearly 500 bcf more gas has been pulled
from storage than last year.
    
    RIGS DECLINE; OUTPUT SLOWING LITTLE
    Baker Hughes data last week showed the gas-directed
drilling rig count fell 13 to a nearly 14-year low of 407.
 
    It was the fifth drop in six weeks, but production has not
slowed much, if at all, from the record high posted last year.
    (Rig graphic: r.reuters.com/dyb62s)
    While the EIA on Tuesday lowered its growth forecast for
2013, it still expects marketed gas production to hit a record
high for the third straight year. 

 (Editing by Sofina Mirza-Reid)
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