Prices continued to decline at most points Thursday as moderate weather forecasts in most areas kept a damper on gas demand and storage purchases were insufficient to put a floor under the spot market.

A few flat to about 3 cents higher points in San Juan Basin and the Rockies barely managed to keep Thursday’s softness from being universal. Otherwise, losses ranged from about a nickel to 55 cents or so. Northeast citygates took the biggest price hits despite New England highs being due to slip back into the 50s Friday after reaching the low 60s Thursday.

As a western trader had observed Wednesday, the weak start of the May aftermarket will keep spot prices below first-of-month indexes for at least a while. As of Thursday nearly all points were sporting double-digit deficits to index; only a few, primarily in the Rockies, traded flat to about a nickel higher. That was in sharp contrast to April-ending numbers, where hefty premiums to index stretched across the board, with most premiums in triple digits.

The Energy Information Administration handily surpassed consensus expectations in the 70-75 Bcf range when it reported an 86 Bcf storage injection for the week ending April 25. Futures traders had a predictably bearish response, sending the June natural gas contract 28.2 cents lower amid weakening prices throughout Nymex’s energy products complex.

A strong windy cold front will sweep from the southern Plains into the Southeast over the next two days, according to The Weather Channel (TWC). That will tend to snuff out much of the South’s air conditioning load, which had been rebuilding following a cool start of the week. The demand-reducing effect will already be in place in the Midcontinent Friday. Oklahoma City, where temperatures peaked in the mid 80s Thursday, will reach only about 70 Friday, said Weather Central.

Another cold front will be reaching the Great Lakes and Ohio Valley Saturday, TWC said, but until then mild weather will prevail. The Northeast will be a bit chilly Friday, while a warm front is due in the Mid-Atlantic.

For now the Rockies, Canada and U.S. areas near the Canadian border are the only places where substantive heating load remains.

Kern River reported Thursday that linepack had returned to normal systemwide.

Chances are fairly good of PG&E issuing a high-inventory OFO Friday or Saturday. Its California Gas Transmission system linepack was projected to exceed the maximum target level Saturday and then go even higher Sunday.

“Yeah, prices will be softer again Friday,” said a Texas-based marketer. That’s a pretty easy call, he continued, considering moderate weather forecasts in most areas, a bearish storage report, weak futures Thursday and the drop of industrial load that occurs during the weekend. It’s still very cold in the Rockies, he noted, which made it the only market area to still be making small gains.

It’s a pretty good time for Independence Hub to be off-line with moderate weather depressing gas demand, the marketer said. The significantly larger-than-expected storage injection shows that the market isn’t missing its output very much, he added. There should be quite a bit of price softness, at least in the Gulf Coast, when Independence supplies come back into the market, he concluded.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.