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'Bullish' Storage Halts Bears in Their Tracks

'Bullish' Storage Halts Bears in Their Tracks

Amid a swirl of pre-AGA storage speculation, the futures market continued lower Wednesday, touching its lowest level so far this month. After a lower opening, the July contract quickly mapped out its high trade of the day at $2.36, before slipping 4 cents to finish at $2.327. Estimated volume of 65,584 injected some life into the market, following sub-45,000 trading sessions Monday and Tuesday.

Record setting temperatures in many East Coast cities last week made the usual Wednesday exercise of predicting the weekly American Gas Association Storage report a little more dicey this week. Preliminary estimates ranged from as little as 65 Bcf to as much as 110 Bcf. So it was a surprise to most when the AGA said that 63 Bcf was injected into underground storage facilities last week. And because this year's injection figure neatly fell 41 Bcf short of last year's 104 Bcf refill, it exactly erased to zero the often-quoted year-on-year surplus which has hung over the market all year.

However, one Midcontinent trader was unimpressed by the smallness of the report. "The market zone has been most actively injecting gas into storage the entire spring. Looks like they just took the week off." He added that storage injectors are not sweating the fact that refills are not keeping pace with last year. "They are starting to come to the realization that the longer they wait, the cheaper gas will become."

For now, that realization may have to wait because the market was quick to react to the bullish news in last night's Access session by jumping 2.8 cents higher to $2.355.

AGA Storage Surplus Vanishes

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