Natural gas futures spiraled lower into the close Wednesday afternoon, following the announcement that a whopping 102 Bcf was added to underground storage facilities last week. At the close, the prompt June contract was 15.8 cents lower at $4.483, more than 22% percent down from the $5.78 notched a little over a month ago.

According to the American Gas Association, 102 Bcf was injected into the ground last week, bringing stocks to 26% full at 850 Bcf. To even those touting the most bearish 80-100 Bcf expectations ahead of the release, the injection came as a surprise. Against historical comparisons, meanwhile, 102 Bcf was record-setting. Never before has that much gas been put in the ground in one week during the month of April. Last year’s figure was a 32 Bcf addition and the five-year average is 44 Bcf.

Prices reacted accordingly, dropping a cool dime in the five minutes after the report was released.

For Robert Morris of Salomon Smith Barney, the injection figure was a big number. “It was more than we were looking for, but we’ve been kind of bearish on the gas outlook in the near term for about a month… It is a combination of two things. Gas production is up—at least 3% for the full year (1.25 Bcf a day over a year ago) And backed-up demand due to fuel switching, plant closures, conservation, etc. is still on the order of 4 Bcf a day plus or minus.

“The combination of the two is what is giving you the strong pace of injections. It’s not going to turn around overnight. The big question here is at what level — and at those levels to what extent — does some of this demand come back to natural gas. We still think at this juncture long term prices will settle out in the $4 to $5 range, but I can make the case of gas dipping below $4 before we get to next winter.”

Another question is to what extent higher crude oil prices will prompt fuel switchers back over to natural gas. Although off by more than a dollar on Wednesday, crude oil prices have been on the move lately, as prompt month prices rebounded from $25 to $29 during the month of April.

However, Morris sees the run-up in crude prices as more a function of higher gasoline prices than anything, and that has made for a disconnect between distillates and crude. “In the face of crude rising, distillate prices have been coming off. The spread between distillates and crude is about as wide as it’s ever been,” he said.

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