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US gas futures slip for 3rd day, high storage, production weigh
January 9, 2013 / 2:27 PM / 5 years ago

US gas futures slip for 3rd day, high storage, production weigh

* Front month remains above last week's 3-month spot low
    * Longer-term outlooks still have some cold weather
    * Coming Up: EIA natgas storage data Thursday

    By Eileen Houlihan
    NEW YORK, Jan 9 (Reuters) - U.S. natural gas futures slid
nearly 2 percent early Wednesday, extending losses for a third
straight day as near-term mild weather, bloated inventories and
record high production weighed on sentiment, traders said.
    In addition, some cold weather in long-term weather outlooks
was not expected to be as severe or as encompassing as
previously expected, further pressuring prices.
    As of 9:10 a.m. EST (1410 GMT), front-month February gas
futures on the New York Mercantile Exchange were at
$3.158 per million British thermal units, down 6 cents, or just
under 2 percent.
    The front-month contract fell to $3.05 last week, a contract
low and the lowest mark for a spot contract since late
September.
    The latest National Weather Service six-to-10-day forecast
issued on Tuesday again called for above-normal temperatures for
about the eastern third of the United States, but below or
much-below-normal readings for the rest of the country.
    Private forecaster MDA Weather Services in its 11 to 15-day
outlook called for a return to mostly normal readings for the
entire country.
    Nuclear outages totaled 8,500 megawatts, or 8 percent, of
U.S. capacity, up from 5,200 MW out a year ago and a five-year
average outage rate of about 5,700 MW. 
    
    STORAGE LEVELS REMAIN BLOATED
    Last week's gas storage report from the U. S. Energy
Information Administration showed gas inventories fell the prior
week by 135 billion cubic feet, above industry expectations for
a 127 bcf draw. 
    Despite the big draw, storage remains at 3.517 trillion
cubic feet, nearly 1 percent above year-ago levels and more than
12 percent above the five-year average level.
    (Storage graphic: link.reuters.com/mut84t)
    Inventories started the heating season in early November at
a record high 3.929 tcf, the fourth straight year that
inventories have headed into the heating season at an all-time
peak.
    Withdrawal estimates for Thursday's EIA report range from
155 bcf to 192 bcf with most in the low-180s bcf. Last year
stocks fell 95 bcf in the same week and on average over the past
five years have fallen about 149 bcf.
    
    RIGS GAIN, OUTPUT STILL NEAR RECORD
    Baker Hughes data last week showed the gas-directed rig
count rose by eight to 439, its third straight weekly gain.
 
    But drilling for natural gas has mostly declined for more
than a year, with gas rigs down 53 percent since peaking at 936
in October 2011.
    (Rig graphic: r.reuters.com/dyb62s)
    The EIA this week said it expects gas output in 2013 to rise
to a record high of 69.84 bcf per day, the third straight annual
record.

 (Reporting by Eileen Houlihan;editing by Sofina Mirza-Reid)

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