Friday, 30 November 2012 03:31
NEW YORK: US spot natural gas prices slid across the nation on Thursday, most for a second straight day, as moderating weather was expected to curb heating demand in the coming days.
Gas for Friday delivery at the nation's benchmark supply point Henry Hub in Louisiana slid 10 cents on average to $3.61 per million British thermal units, after falling 6 cents on Wednesday for gas delivered on Thursday.
Tuesday Hub cash gas rose to $3.77, its highest mark since late September 2011, according to Reuters data.
Late deals also eased to 5 cents under the new front-month January gas futures contract on the New York Mercantile Exchange , from deals done late Wednesday at a 2-cent discount to the December contract.
Thursday's average price, however, was still above the November monthly index of $3.47 and the year-ago price of $3.39.
On NYMEX, the front-month contract slid 15.3 cents, or about 4 percent, to settle at $3.648, after the spot contract rose to $3.933 last Friday, its highest price since November 2011.
In major consuming markets, gas on the Transco pipeline at the New York citygate slid nearly $1 on the moderating forecasts to $4.42, down from Wednesday's $5.40 average, its highest since last winter.
Other Northeast prices traded close to $10 for a second straight day, with gas on the Algonquin system in New England remaining the priciest in the nation amid ongoing pipeline restrictions in the region.
Chicago gas was 13 cents lower on the day at $3.73.
Nuclear outages totaled about 20,200 megawatts, or 20 percent of US capacity, down slightly from 20,800 MW out on Wednesday but up from 8,800 MW out a year ago and a five-year outage rate of about 11,900 MW.
The National Weather Service's six-to-10-day forecast on Wednesday again called for above-normal temperatures for nearly the entire country, with some below-normal readings only in Florida.
SURPRISE STORAGE BUILD
Data on Thursday from the US Energy Information Administration showed domestic gas inventories rose by 4 billion cubic feet last week to 3.877 trillion cubic feet.
Traders viewed the build as bearish, noting Reuters poll estimates called for a 12-bcf draw and the five-year average for that week was an 18-bcf decline.
The build increased the surplus relative to last year to about 1 percent above the same week in 2011, and also added to the excess versus the five-year average, driving that surplus to about 5 percent.
While a huge inventory overhang to last year, which peaked in early April at nearly 900 bcf, has been nearly wiped out, storage is still at record highs for this time of year and offers a comfortable cushion to meet any winter spikes in demand or unexpected disruptions in supply.
Stocks hit a record high of 3.929 tcf three weeks ago, making this the fourth straight year in which inventories headed into the heating season at a record peak.
Storage in next week's report is expected to drop below year-ago levels for the first time in 13 months, with early withdrawal estimates ranging from 50 bcf to 90 bcf. Last year during that week, stocks fell 14 bcf, while the five-year average draw is 51 bcf for that week.
Baker Hughes data last week showed the gas-directed rig count rose by 11 to 428, a second straight weekly gain after posting a 13-1/2-year low three weeks ago.
Drilling for natural gas has mostly been in decline for the last year, with gas rigs down 54 percent since peaking in 2011 at 936 in October. The steep slide has fed expectations that producers might curb record output, but so far production has not shown any significant signs of slowing.
The associated gas produced from more-profitable shale oil and shale gas liquids wells has kept dry gas flowing this year at or near a record pace.
Copyright Reuters, 2012