* Mild weather next two weeks could weaken demand
* No immediate storm threats to U.S. Gulf gas output
By Joe Silha
NEW YORK, Sept 27 (Reuters) - U.S. natural gas futures ended
higher on Friday in choppy trade, with technical buying and
short covering ahead of the weekend outweighing pressure from
forecasts for moderate U.S. weather the next two weeks, which
should slow usage.
The front-month contract, which eked out a fractional gain
last week for its fifth rise in the past six weeks, lost 2.7
percent this week despite modest gains in the last three
sessions. Milder late-month weather and no serious storm threats
to U.S. Gulf gas production continued to weigh on sentiment.
"We saw a pullback this week as the weather turned milder,
which should mean higher injections over the next few weeks, but
I don't think the fundamentals are bearish enough for prices to
go much lower," said Steve Mosley at The SMC Report in Arkansas.
Front-month gas futures on the New York Mercantile
Exchange ended up 2.2 cents at $3.589 per million British
thermal units, after trading between $3.521 and $3.591.
The front contract on Thursday posted a five-week low of
$3.402 after a bearish weekly inventory report, but prices
bounced back and settled up slightly, near the $3.50 mark, an
area that is setting up to be decent technical support.
But many traders remained skeptical of any upside with
inventories comfortable, production flowing at a near record
pace and no cold weather on the horizon to kick up heating
The National Weather Service's six-to-10-day outlook calls
for above-normal temperatures for the eastern half of the
nation. Traders noted that at this time of year, readings at
several degrees above the norm were not likely to stir much
Traders viewed Thursday's 87 billion cubic feet weekly
inventory build as bearish, noting it came in above market
expectations in the 76 bcf area. It also was above the 79 bcf
gain seen during the same week last year and the five-year
average increase for that week of 75 bcf.
U.S. Energy Information Administration data showed total
domestic gas inventories stood at 3.386 trillion cubic feet,
about 5 percent below last year's record highs at that time but
nearly 1 percent above the five-year average.
Early estimates for next week's storage report range from 82
to 100 bcf. Stocks gained 77 bcf a year earlier, while the
five-year average rise for that week is 82 bcf.
Baker Hughes data on Friday showed the gas drilling
rig count fell this week for a second straight week, dropping by
10 to 376.
But the count has risen in eight of the last 14 weeks,
posting a six-month high of 401 just two weeks ago, stirring
talk that new pipelines and processing plants could encourage
producers to pump more gas into an already well-supplied market.
The EIA still expects U.S. gas production in 2013 to hit a
record high for the third straight year.
In the ICE cash market, gas for weekend delivery at Henry
Hub , the benchmark supply point in Louisiana,
climbed 2 cents to $3.50, but late differentials were quoted at
about 5 cents under NYMEX.
Gas on Transco pipeline at the New York citygate was fell 2 cents to $3.44 on the mild weekend
outlook, while Chicago was 3 cents lower at
For daily ICE U.S. cash gas prices, click on .
Despite a rise in tropical activity this month, traders said
there were no threats as yet to Gulf of Mexico gas output.
- Basic Materials Industry