Having gotten a negative signal from prior-day futures trading and not yet seeing enough air conditioning load to make a difference, cash prices fell across the board Thursday.

Only one point (El Paso North Baja/Ehrenberg) managed to avoid a double-digit loss, and it was down by nearly a dime. Otherwise declines ranged from about 15 cents to around 40 cents.

Chances of a rally Friday are believed to be slim to none. A further screen decline Thursday, temperatures that outside the desert Southwest and some parts of the South aren’t getting high enough yet to spur substantial cooling demand and the drop in industrial load that accompanies a weekend will act to depress cash numbers further, one source said.

The Energy Information Administration’s estimate of a 91 Bcf addition to storage during the week ending May 12 put national inventories over the 2 Tcf mark with less than a month and a half gone in the traditional seven-month injection season. It also surpassed prior expectations centered on a build in the mid 80s Bcf. Nymex traders clearly saw the report as a bearish signal and responded by sending June futures 13.2 cents lower to a daily settlement of $5.997 — the first time in 15 months that the screen has explored price territory below the key psychological level of $6 (see futures story).

Roughly 3.3 Tcf is considered to be “full” storage, although at least a couple of analysts have suggested that the industry possibly could stuff as much as 3.5 Tcf into storage reservoirs. This means nearly 60% of capacity has already been used less than a third of the way through the season.

Southern Natural Gas, which last week reported that its two storage facilities already were 70% full and that at current injection rates there could be no capacity left by mid-summer (see Daily GPI, May 12), said earlier this week that inventories had risen to 43.3 Bcf as of May 11, or 72% of its total working gas volume of 60.0 Bcf. That compares with 27.4 Bcf (46%) on May 12, 2005 and 26.1 Bcf (44%) on May 13, 2004, the pipeline said.

The potential of having no available storage space means that a time may come this summer when gas producers are forced to shut in supplies voluntarily, a FERC official said Thursday (see related story).

Without issuing an OFO, PG&E said linepack was around its minimum target level Thursday and would remain there Friday before inching up into its normal range over the weekend. However, in the Rockies production area Kern River said linepack was high in its two farthest upstream segments.

Although she stopped short of predicting a price rebound Friday, a Dallas-area trader saw “a little bit of a rally already,” referring to June futures recovering to just shy of $6.00 after hitting a $5.88 low almost immediately after the storage report was released. On the storage issued, she commented, “It’s not just Southern; everything [storage facilities] is filling up fast.” Adding to general bearishness, the trader said, is that “heat is on the heat on the way almost everywhere but the Northeast,” and that’s where a lot of the heaviest gas usage is.

However, even with Thursday’s softness, she said her producer clients are not having any trouble finding market, probably because of continuing storage injection purchases. She added that she thought “they’re [storage buyers] are going to be sorry for not waiting” to pick up their injection supplies when prices presumably will get much cheaper. At least Thursday’s screen was an indicator that prices are coming their way, the trader concluded.

Based on anecdotal evidence, the storage situation isn’t dire for everyone. A utility buyer in the South said TGT representatives had told his company that their storage customers were “on target” with their injection schedules, or “maybe a little ahead of normal.” It’s been pretty nice area weather recently, he said, but local temperatures are predicted to get into the mid to high 90s around the middle of next week.

A western marketer said the weather is “too beautiful” in his region, and that is the problem with his markets. Noting that he hadn’t been active in trading this week, he added that “too much paperwork” is another problem.

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