US spot natgas prices mixed, NY slips ahead of mild weekend

NEW YORK: US spot natural gas prices traded narrowly mixed on Friday, with mild weekend weather forecasts pressuring prices in New York, while the chilly outlook for next week lifted quotes slightly on most Gulf Coast pipelines.

Cold late-winter weather, particularly in the Midwest, has stirred heating demand and helped drive most spot cash prices up nearly 10 percent over the last month.

"Weekend differentials were a little softer, but it looks like there's still enough demand around to keep (Gulf and Midwest) cash prices pretty strong," a Texas-based trader said.

Gas for weekend delivery at Henry Hub, the benchmark supply point in Louisiana, climbed 3 cents to $3.57 per million British thermal units, but late-morning Hub differentials weakened to about 1 cent under NYMEX from a 1-cent premium on Thursday.

The daily Hub average is above the March monthly index of $3.43 and well above the year-ago price of $2.24.

Chilly temperatures in February and March also triggered strong draws from inventory, prompting most analysts to lower their end-winter storage estimates to about 1.8 trillion cubic feet, or just about 4 percent above average.

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

But many traders remain skeptical of the upside in prices, with storage still high, production flowing at or near a record peak and milder spring weather likely to soon slow demand.

Prices on the Transco pipeline at the New York citygate slid 15 cents to $3.75 ahead of milder weekend weather. In Chicago, another key gas-consuming market, prices edged up 4 cents to $3.70.

After a brief late-week warm up, MDA Weather Services noted that the six- to 10-day outlook turned slightly colder overnight, particularly for the Midwest.

ABOVE-AVERAGE STORAGE DRAW

US Energy Information Administration data on Thursday showed total domestic gas inventories fell last week to 2.083 trillion cubic feet, but total storage is still relatively high at 269 billion cubic feet, or 15 percent, above average.

Early withdrawal estimates for next week's inventory report range from 88 bcf to 139 bcf. That would be well above both the 66 bcf pulled from storage during the same week in 2012 and the five-year average decline for that week of 74 bcf.

So far this winter, nearly 500 bcf more gas has been pulled from storage than last year at this time.