UPDATE 4-U.S. natural gas ends up 11 pct after flirting with 5-yr high

Reuters forecast a drawdown of 251 bcf with a range of 212
Wednesday, 19 Feb 2014 | 2:56 PM ET

* More winter weather expected for large parts of U.S. End-of-winter storage seen below 1 trillion cubic feet

(Adds settlement price in lead, fourth and ninth paragraphs) NEW YORK, Feb 19 (Reuters) - U.S. natural gas futures settled up 10.8 percent on Wednesday after hitting the highest price in more than five years on concern that forecasts for more late winter cold weather across the United States will further increase heating demand and deplete supplies. As prices rose, traders bought futures contracts to cover short positions and speculative money poured into the market, further advancing the rally, brokers and analysts said. Natural gas futures for March delivery settled up 59.8 cents at $6.149 per million British thermal units, after jumping as much as 72.4 cents, or 13 percent, to $6.275 per mmBtu, the highest since December 2008. "This test of $6.00 stinks of speculative involvement," Aaron Calder, senior market analyst with Gelber & Associates in Houston, said in a client note. "Managed money is taking advantage of the imbalance and pouring into the long side of the trade." Weather forecasters expect frigid temperatures to continue after record-cold weather in January led to steep draws of natural gas to meet heating demand, leaving less gas to meet summer electric power demand. The 11- to 15-day forecast points to "ongoing colder than normal conditions" over much of North America, said meteorologists at MDA Weather Services in Gaithersburg, Maryland. Temperatures in Chicago will reach sub-zero (Fahrenheit/below minus 18 degrees Celsius) at the end of next week while New York temperatures will reach into the teens, according to the MDA forecast. The March contract on the New York Mercantile Exchange settled at $1.20 over April, widening the spread between the two "The rally is confined to March, but as time goes by the seriously depleted storage level is going to catch on," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut. "The back of the board has some catching up to do."

Storage levels are expected to drop to a low of 890 billion cubic feet (bcf) at the end of March, and "we do not see a full recovery over the summer," said Thomson Reuters natural gas analyst Jan Schulte. Analysts at Thomson Reuters Point Carbon are expecting the U.S. Energy Information Administration (EIA) to report a draw of 264 bcf in Thursday's weekly inventory report. Analysts polled bcf to 270 bcf. In the cash market, gas at the Henry Hub <GT-HH-IDX>, the benchmark supply point in Louisiana, rose 22 cents to $5.96 per mmBtu on average, a 19-cent discount to NYMEX. Gas prices for Thursday delivery on the Transco Zone 6 pipeline <E-TSCO6NY-IDX> in New York traded 10 cents higher at $6.15 per mmBtu on average. Nuclear plant outages, which create demand for natural gas as a substitute fuel, were at 9,655 megawatts, up from 9,570 MW on Tuesday. That compares with 16,100 MW a year ago and a five-year average outage rate of 10,300 MW.

(Additional reporting by Eileen O'Grady in Houston; Editing by Marguerita Choy and Bernadette Baum)