Cold forecast props up U.S. natgas futures for 2nd day


* Cold extended forecast supports prices, despite warm-up

* Comfortable storage, record production also weigh

By Joe Silha

NEW YORK, Nov 15 (Reuters) - U.S. natural gas futures ended

higher for a second straight day on Friday as investors shrugged

off mild weekend weather forecasts and focused instead on the

colder temperature outlook for next week that should increase

heating demand.

After a brief warm-up in the Northeast and Midwest late this

week, Commodity Weather Group said the six- to 15-day forecast

remains variable, but cool temperatures are expected across much

of the East and South.

"People are looking ahead to the next storage report which

should be constructive, and the weather forecasts mostly look

supportive for the rest of the month after this warm spell is

over," said Steve Mosley at The SMC Report in Arkansas.

Front-month gas futures on the New York Mercantile

Exchange ended up 5.5 cents, or 1.5 percent, at $3.66 per

million British thermal units, after trading between $3.575 and


The nearby contract finished the week up 2.8 percent, its

second straight weekly gain following a 1.3 percent rise the

previous week. The combined run up of 4.2 percent since Nov. 1

was the biggest two-week climb in four weeks.

But with stockpiles at comfortable levels and production

flowing at a record-high pace, many traders remain skeptical of

the upside, at least until more sustained cold lifts demand.

With over a billion cubic feet per day of new gas flowing

from Marcellus shale this month and more supply likely coming,

many traders agree that temperatures this winter will have to

stay cold if prices are to avoid testing the $3 mark.

Most traders viewed Thursday's 20-billion-cubic-foot weekly

natural gas inventory build as neutral for prices.

The data reported by the U.S. Energy Information

Administration showed that total domestic gas inventories of

3.834 trillion cubic feet were just 2 percent below last year's

record highs at that time but 1.5 percent above the five-year


That build should be the last of the season, with early

estimates for next week's storage report looking for a

withdrawal of 15 bcf to 41 bcf. That would compare with a 36 bcf

draw in the year-earlier week and a five-year average draw of 2

bcf for that week.

Baker Hughes data on Friday showed the gas drilling

rig count rose this week for the fourth time in five weeks,

gaining five to 370.

The gas rig count has risen in 13 of the last 21 weeks,

stirring talk new pipelines and processing plants, particularly

in the Northeast, may be encouraging producers to hook up more

wells and pump more gas into an already well-supplied market.

The EIA on Wednesday raised its estimate for domestic

natural gas production in 2014, forecasting output would be up

more than 1 percent from 2013's record-high levels.

In the ICE cash market, gas for weekend delivery at Henry

Hub , the benchmark supply point in Louisiana, edged

up 4 cents to $3.56, with late differentials firming slightly to

4 cents under NYMEX, from a 5-cent discount on Thursday.

Gas on the Transco pipeline at the New York citygate tumbled 35 cents to $3.08 on the mild weekend

outlook. Chicago rose 7 cents to $3.63 ahead of

the colder weather expected early next week.

For daily ICE U.S. cash gas prices, click on .

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