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US spot natgas rises for 2nd day on warmer weather
June 5, 2012 / 6:32 PM / 5 years ago

US spot natgas rises for 2nd day on warmer weather

 * Prices up for second day after 5-day drop
 * Warmer weather expected to boost cooling loads
 * Futures also gain for second day after last week's losses
 * Coming Up: API oil data Tuesday, EIA oil data Wednesday
 By Eileen Houlihan	
 NEW YORK, June 5 (Reuters) - U.S. spot natural gas prices rose Tuesday for a
second straight session after five consecutive losses, boosted by warmer weather
that should increase cooling demand.	
 Gas for Wednesday delivery at benchmark supply point Henry Hub NG-W-HH in
Louisiana rose 7 cents on average to $2.39 per million British thermal units,
after rising 8 cents on Monday for gas delivered on Tuesday.	
 Hub cash prices hit a three-month high of $2.66 on May 24, but slid nearly
13 percent last week.	
 Hub cash differentials to futures firmed slightly to about 4 cents under the
front month July futures contract on the New York Mercantile Exchange,
from a 6-cent discount late Monday.	
 The daily Hub average remained just below the June monthly index of $2.42
and well below the year-ago price of $4.83.	
 Despite their recent slide, cash prices gained 11 percent in May and remain
well above the recent 10-year low of $1.82 from late April.	
 In late trade on NYMEX, front-month futures were up about 2 cents at $2.433.	
 In major consumer markets, gas on Transco pipeline at the New York City gate
NG-NYCZ6 rose 6 cents on average to $2.52, while Chicago gas NG-CHGC was
also 6 cents higher on the day at $2.45.	
 Temperatures in both key gas consuming cities were seen mostly in the
low-70s to the low-80s Fahrenheit for the next five days, but Chicago was
expected to climb to the low-90s by the end of the period, according to the
Weather Channel's weather.com.	
 The National Weather Service's six- to 10-day outlook issued on Monday again
called for above-normal readings for much of the nation, with below-normal
readings in Florida and in the West.	
 	
 DESPITE LIGHTER BUILDS, STORAGE STILL BLOATED	
 Weekly gas storage data, while in line with Reuters poll estimates, was well
below average for the seventh time in eight weeks.	
 Data last week from the U.S. Energy Information Administration showed U.S.
natural gas inventories rose 71 billion cubic feet, in line with Reuters
estimates for a 70-bcf gain, but well below the year-ago adjusted build of 89
bcf and the five-year average build for that week of 100 bcf. 	
 Total domestic gas inventories rose to 2.815 trillion cubic feet, still 35
percent above last year and also 35 percent above the five-year average.	
 (Storage graphic: link.reuters.com/mup44s)	
 The surplus to last year has dropped 17 percent from late-March peaks, but
stocks remained at record highs for this time of year. There are concerns the
glut will drive prices lower this summer as storage caverns fill.	
 The storage surplus to last year will have to be cut by at least another 480
bcf to avoid breaching the government's 4.1-tcf estimate of capacity. Stocks
peaked last year in November at a record 3.852 tcf.	
 Early estimates for this week's EIA report range from 45 bcf to 75 bcf
versus an 81-bcf adjusted increase a year earlier and a five-year average gain
for that week of 99 bcf.	
 	
 PRODUCTION FALLING FROM RECORD	
 EIA data last week also showed gas production was finally dropping from
January's record high, with two straight monthly declines.	
 The EIA said U.S. natural gas production fell 0.4 percent in March to 71.76
bcf as producers continued to scale back drilling in the face of low prices. It
was a second monthly decline after a revised 1 percent fall in February.
 	
 In addition, Baker Hughes data on Friday showed the gas-directed rig count
fell by six to a 12-1/2 year low of 588. The 37 percent drop in dry gas drilling
-- since peaking at 936 in October -- has stirred talk producers were finally
getting serious about stemming the flood of supplies. 	
 But the shift away from dry gas to higher-value shale oil and shale gas
liquid plays still produces plenty of associated gas that ends up in the market
after processing. That has slowed the overall drop in dry gas output.
 	
 (Rig graphic: r.reuters.com/dyb62s)	
 	
 MORE FUNDAMENTALS	
 Colorado State University researchers last week raised their forecast for
the 2012 Atlantic hurricane season to 13 tropical storms, with five hurricanes
and two 'major' hurricanes.  	
 Nuclear power plant outages were running at about 16,500 megawatts, or 16
percent, on Tuesday, down from about 17,000 MW out a year ago but up from a
five-year outage rate of about 10,900 MW. 	
     	
 Average prices at other spot gas market points and previous day prices
follow (US$/mmBtu):  	
                                 06/05/12            06/04/12         	
  Henry Hub                           2.39                2.32             	
  New York city gate                  2.52                2.46             	
  Chicago city gate                   2.45                2.39             	
  Panhandle (Mid-continent)           2.32                2.24             	
  Northern at Demarcation  (Minn.)    2.39                2.34             	
  Southern California Border          2.62                2.59             	
  Katy Hub (East Texas)               2.40                2.37             	
  Waha (West Texas)                   2.39                2.35             	
  Dominion-South (Appalachia region)  2.40                2.33             	
  Columbia TCO (Appalachia region)    2.40                2.34             	
  	
 For more U.S. Spot Natural Gas prices click on <0#NG-US> 	
  	
 RELATED LINKS 	
 - Canadian Spot Natural Gas Prices..............<0#NG-CA> 	
 - U.S. Spot Gas versus Oil Comparisons.......... 	
 - BTU U.S. Spot Natural Gas Prices..............<0#NG-BTU> 	
 - U.S. Nuclear Power Reactor Outage Table ...... 	
 - North American Power Plant Outage Table ..... 	
 - North American Power Transmission Table ..... 	
 - U.S. EEI Electricity Output Report ........... 	
 - U.S. EEI Electricity Output Table ............ EEI- 	
 - NYMEX Natural Gas Futures .................... <0#NG:> 	
 - NYMEX Crude Oil Futures .......................<0#CL:>	
	
 (Reporting by Eileen Houlihan)	
 

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