US natgas futures end up, front hits 6-wk high on EIA data

NEW YORK: US natural gas futures ended up sharply on Thursday, with the front-month contract posting a six-week high early in the session after a government report showed a weekly inventory draw well above market expectations.

The US Energy Information Administration report showed total domestic gas inventories fell last week by 146 billion cubic feet to 2.083 trillion cubic feet.

"The market ... had already priced in the fact that the (EIA) report was going to be bullish versus both last year and the five-year average. What was not priced in ... was a larger-than-expected withdrawal," Energy Management Institute's Dominick Chirichella said in a report.

Most traders agreed the decline was bullish, noting it was the third straight week that the draw came in above expectations. A Reuters poll on Wednesday showed traders and analysts had forecast a 134 bcf drop.

Front-month gas futures on the New York Mercantile Exchange ended up 11.2 cents, or 3.2 percent, at $3.582 per million British thermal units, after climbing to a six-week high of $3.603 right after the EIA report was released.

Cold late-winter weather has helped push the front contract up nearly 14 percent in the last three weeks, turning the chart picture more supportive as it broke some key moving average and trendline resistance along the way.

The near contract has gained 3.6 percent so far this week following a 5 percent rise last week, but many technical traders still need a front-month close above this year's high of $3.645 to turn bullish.

Despite a late-week warm-up, traders noted there was still some chilly weather in the extended forecast.

The National Weather Service six- to 10-day and eight- to 14-day forecasts on Thursday showed below-normal temperatures for the eastern half of the nation.

Prices have also drawn support from more utilities using gas for power generation this year and from sizeable nuclear plant outages that have prompted more gas burn. Gas-fired units are typically used to offset any shut nuclear generation.