This week’s two-day price rally ran out of gas (pun intended) Wednesday as prices retreated across the board by amounts ranging from a little less than a dime to about a quarter. The previous day’s natural gas futures drop of 7 cents, coupled with a plunge of nearly a dollar and a half in the May crude oil contract that day, were cited as the chief factor in the softness since fundamental weather-related demand is seeing little change.

Prospects are good for softening quotes to continue Thursday. The Good Friday/Easter holiday period will exacerbate the drops in industrial load that typically accompany a weekend, weather trends in the Northeast and Midwest will be starting the transition to what the National Weather Service expects to be above normal temperatures throughout most of the U.S. next week, and energy futures were weak Wednesday.

However, Nymex’s petroleum product offerings were reported to be rebounding in Access trading based on news of a fatal explosion early Wednesday afternoon at the BP refinery complex in Texas City southeast of Houston. The facility, the nation’s third-largest, accounts for about 30% of BP’s North American refining capacity. The incident occurred as U.S. refiners are trying to build gasoline inventories in preparation for the summer driving season. In response, unleaded gasoline futures at New York Harbor hit a record $1.608/gallon in after-hours activity at Nymex.

The refinery explosion will put a dent in intrastate Texas natural gas demand, but the price impact is expected to be minimal as mildly cool to warm temperatures prevail in the Lone Star state. Texas has little in either heating or cooling load for now, a producer said.

Meanwhile, despite Wednesday’s price drops it will still be more like winter than spring in some areas Thursday. Heavy, wet snow is forecast from eastern Pennsylvania through southern New England, according to The Weather Channel (TWC). The Midwest and northern Plains are also due for more snow, it said, although much of it will be in sparsely populated areas. Below-average temperatures will continue in much of the West, while the South will continue to bask in warm spring conditions, TWC said.

A Gulf Coast producer said there’s little doubt that prices will be “very soft” Thursday, adding that she was unable to see any weather load for gas next week. She was aware of several nuclear plant outages in the Northeast and thought that would give a significant boost to gas-fired generation demand, “but I haven’t really seen it.” However, she believed that maybe the nuke outages helped keep gas prices from falling any harder than they did Wednesday.

Though she isn’t British, a Midwest marketer said it was “bloody cold, and there’s a bite to the air” in her region. It certainly wasn’t feeling like spring to her, with temperatures around freezing Wednesday. Her company hasn’t bought any new gas yet this week; “we’re hoping the weekend market will be better price-wise,” she said.

The marketer said she had just been informed that MichCon’s GCR (Gas Cost Recovery) charge will be $7.99 for April, which she called “very high.” She didn’t know what the Consumers Energy charge will be yet. She reported hearing last-day-settlement April basis of plus 27-30 cents for citygates at both of the big Michigan LDCs.

One trader said she had already finished with all April business Tuesday. She said her indexed deals originally had been bid at a discount when the screen was higher, but she failed to do any of those deals and later wound up doing index premium deals on Panhandle Eastern.

As a sign of how significant low hydropower levels could be to western gas markets this summer, representatives of several electric utilities in the Pacific Northwest will hold a press conference Thursday morning at Bonneville Power Administration headquarters in Portland, OR to share information about the current water supply forecast and to urge Northwest residents to use energy efficiently this year.

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