NEW YORK: US natural gas futures ended higher on Wednesday for a second straight day, backed by chilly weather forecasts for the next two weeks that should underpin heating demand despite prospects for milder temperatures next month.
Front futures have mostly been in an uptrend since mid-February, rising nearly 35 percent during eight straight weeks of gains. Chilly March and April weather and above-average nuclear plant outages helped whittle down record high inventories and tighten overall supplies.
Nuclear plant outages have mostly been running above average and have increased demand for gas-fired replacement power.
"Natural gas prices are holding the recent range on a temperature outlook that appears quite similar to yesterday's run," Citi Futures analyst Tim Evans said in a report, also noting some buying ahead of Thursday's weekly inventory report.
Front-month gas futures on the New York Mercantile Exchange ended up 5.4 cents, 1.3 percent, at $4.214 per million British thermal units after trading between $4.146 and $4.244.
But chart traders noted the market seemed to be struggling here, with the front contract unable to break above Monday's 20-1/2-month high of $4.29.
Buyers may be growing cautious as prices near levels that could slow demand by prompting more utilities to switch from gas back to coal for power generation and increase supply by tempting producers to hook up more wells.
There are also concerns that record growth in futures open interest that has accompanied recent price gains means there are a lot of new longs in the market that could rush to take profits and sell out once temperatures turn milder.
In its six-to-10-day outlook, MDA Weather Services said strong cold remains on track to drop into the central United States, with below or much below normal temperatures expected in the Plains, Midwest and South. Northeast states will see mostly seasonal readings during the period.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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