Next-day gas prices continued to erode Thursday except for in the Northeast, where a handful of points picked up between 10 to 20 cents. Weakness was widespread but was most pronounced at Wyoming points and locations eastward into the Midcontinent. Increases in the Northeast were only partially able to offset the general decline. Futures bears were pleased with the 10:30 a.m. EST storage report, which showed a withdrawal somewhat less than expectations.

The Energy Information Administration reported that 80 Bcf was pulled from storage, about 5 Bcf less than what was expected. At the closing bell April had given up 3.0 cents to $2.272 and May had retreated 2.8 cents to $2.372. April crude oil gained 42 cents to $106.58/bbl.

Overall, prices fell about 2.5 cents, but points in the Midcontinent and Rockies were especially weak. At the Cheyenne Hub next-day gas was 7 cents lower, and on CIG Mainline quotes were nearly a dime weaker. At NGPL Midcontinent and on Panhandle, next-day deliveries were a little more than a nickel lower.

AccuWeather.com forecast that the high in Denver Friday would reach a balmy 60, 14 degrees higher than Thursday. Kansas City’s high Thursday of 50 was forecast to rise to 57 Friday.

A Great Lakes marketer said, “We were down to $2.38 on both [MichCon and Consumers] systems. There is warm weather forecast, and we have to be careful because we don’t know what our customers’ actual needs are going to come in at. We are looking at 50- and 60-degree highs for the next 10 days.”

Michcon, Consumers and Chicago Citygate were all lower by about 3 to 4 cents.

A Northeast marketer said he thought the rise at Northeast points was due to short-term weather conditions. “There’s a little bit of cold weather coming in on Saturday, at least cooler than what it has been for the last couple of days, and that has pushed the gas prices a little higher. There is nothing too sinister about this, and I don’t think there is anything behind the higher prices other than the cooler weather.”

At Algonquin Citygate next-day gas rose 15 cents, and on Tennessee Zone 6 200 L and Dracut prices were more than a dime higher.

Boston’s high of 71 Thursday was forecast to drop to a more seasonal 47 Friday, according to AccuWeather.com.

Natural gas storage continues to be weigh on prices. With the withdrawal of 80 Bcf, gas in storage currently stands at 2,433 Bcf, or 739 Bcf more than last year and 792 Bcf more than the five-year average. The surplus to last year fell, but the five-year overage continued to expand.

Consensus expectations are for continued builds in storage and downward pressure on prices. “While a rising surplus doesn’t always result in new lows in price, it does represent a downward fundamental pressure that could well translate into fresh 10-year lows,” said Tim Evans of Citi Futures Perspective in New York.

Traders had been looking for a somewhat steeper withdrawal. A Reuters poll of 25 analysts revealed an average of 84 Bcf with a range of 56-93 Bcf, and Ritterbusch and Associates was looking for a withdrawal of 81 Bcf. Bentek Energy predicted a decline of 87 Bcf.

In spite of Thursday’s futures market loss, a Chicago banker sees short-term hope for the bullish cause. “Looking at a continuation chart for natural gas, I noticed it had been oversold at times for six months using stochastic indicators. I wondered how many times the market had been oversold for six or more months and what the ensuing price movement was afterward.

“There have been five other times in the last 20 years that the market has been oversold for six or more months, and after coming out of the oversold condition, the market has rallied an average of 37%. That has been a gain of anywhere from 40 cents to $2.50.

“The longest we have ever stayed in an oversold condition by this measurement has been eight months, and that has happened twice: once in 2001 and once in late 2008, early 2009. I am making the argument that we could see as much as a 75-cent rally from whatever lows we make between now and April,” he said.

“We have all seen natural gas trade, and it doesn’t stay in a trading range forever. We could rally back up to $3 and still be in a very bearish market,” the banker pointed out.

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