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UPDATE 3-Front U.S. natgas futures end down, 1st loss in four sessions
July 17, 2013 / 4:43 PM / 4 years ago

UPDATE 3-Front U.S. natgas futures end down, 1st loss in four sessions

* Milder six- to 15-day weather outlook triggers selling
    * Northeast, Midwest heat wave this week limits downside
    * Coming Up: EIA, Enerdata natgas storage data on Thursday

 (Adds analyst quote, updates with closing prices)
    By Joe Silha
    NEW YORK, July 17 (Reuters) - Front-month U.S. natural gas
futures ended lower on Wednesday, pressured by light long
liquidation after three days of gains and by a milder weather
outlook for late this week and next week that should slow
overall demand.
    A blistering heat wave this week has triggered strong
air-conditioning load and helped prop up prices, but doubts
remain about further upside, with inventories near normal for
this time of year, production still at or near a record high,
and the heat expected to break by the weekend.
    "There may have been some (long) liquidation ahead of the
(EIA) storage number on Thursday, but the weather looks like
it's going to moderate significantly by next week," said Kyle
Cooper, managing partner at IAF Advisors in Houston.
    Front-month gas futures on the New York Mercantile
Exchange ended down 4.8 cents, or 1.3 percent, at $3.629 per
million British thermal units, after trading between $3.607 and
$3.683. So far this week, nearby futures are down slightly.     
 
    The nearby contract, which hit a 3-1/2 month low of $3.526
in late June, finished last week up 0.7 percent following a 1.5
percent rise in the previous week.
    Chart traders noted that the market seemed stuck in a
technical range, with decent buying in the $3.50s but plenty of
selling in the $3.70s. Many agreed a close below key support at
$3.50 would be bearish and could trigger more downside.
    After record or near-record heat this week, particularly in
the Northeast, MDA Weather Services expects temperatures for
most of the eastern half of the country to moderate to near
seasonal levels during the six- to 15-day time frame.
    Inventory builds have exceeded the five-year average for the
last six weeks, but that streak could end with the next Energy
Information Administration storage report. {ID:nEAP100B00]
    Traders and analysts polled by Reuters expect an increase of
64 billion cubic feet when the EIA releases its weekly inventory
report on Thursday. 
    That would be well above the 29 bcf build during the same
week last year but below the five-year average increase for that
week of 70 bcf.     
    Despite a drop in dry gas drilling last month to an 18-year
low, the EIA still expects gas output in 2013 to hit a record
high for a third straight year. 
    

 (Additional reporting by Eileen Houlihan; Editing by Jim
Marshall, Steve Orlofsky and John Wallace)

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