In a move that could be considered risky given the long Easter holiday weekend, natural gas traders continued to grind futures prices lower on Thursday, pushing the prompt month to a multi-year low. The May Nymex gas futures contract settled at $2.49, down 2.7 cents on the day. June slipped 2.4 cents to $2.535.

Spot gas, which traded Thursday for delivery through Monday, also continued to slide as mild temperatures combined with the typical light demand seen on holiday weekends to pressure markets coast to coast. The NGI Spot Gas National Avg. dropped 21 cents to $1.885.

While cash declines were significant due to the long weekend, it was the futures market that continued to make waves on Thursday. One day after slashing through not one but two levels of key technical support, at $2.55 and $2.52, bears’ appetite for more price destruction grew, albeit just slightly.

The May contract started the day about a penny lower at around $2.50, another major support level, and then dropped another penny before the Energy Information Administration’s (EIA) storage report, which was released at 10:30 a.m. ET. Prices briefly moved into positive territory after the report but then quickly resumed their slide throughout the remainder of the day.

The EIA reported a 92 Bcf injection into storage inventories for the week ending April 12, a build that was within the range of expectations but a few Bcf larger than consensus. The print also compared to last year’s 34 Bcf withdrawal and the five-year 21 Bcf injection.

“The report printed higher than all national survey averages, but the bounce higher seemed to suggest the market was relieved it didn't print fatter and toward 100 Bcf,” NatGasWeather said. “The bounce back over $2.50 could have been primarily due to profit taking after steady selling all week.”

Bespoke Weather Services, which had called for an 88 Bcf injection, said much of this week’s selloff may have been driven by the fear that the market could see its first triple-digit injection of the season already.

While the 92 Bcf still reflects loose balances, it was not quite as loose as the last couple of weeks, and the firm suspects that the next EIA number will be somewhat tighter also, “as we find it very difficult to imagine that balances will not show meaningful tightening ultimately, given price levels sitting at multi-year lows,” Bespoke chief meteorologist Brian Lovern said.

Blue Gold Research’s Adrian Bakker, research chief, said that any additional downward spiral is rather limited at this point. Speaking on Enelyst, an energy chat room hosted by The Desk, Bakker said part of the reason for the recent price plunge is because “too many intermediaries were caught with too many long positions. So once they started to liquidate, the floor disappeared, so to speak.”

Bulls have capitulated completely and the market price has therefore departed from fundamental factors, he said. “The price is now below ‘fair value’, and it doesn’t even matter how you calculate the ‘fair value.’”

At $2.50, Blue Gold expects to see 8 Bcf/d of potential coal-to-gas switching, which will exert a bullish pressure on the end-of-season storage index.

“Over the course of this injection season, we currently project 29 builds of 80 Bcf (on average). The year/year storage surplus should be around 400 Bcf by October, but in terms of the five-year average, the storage will still be in deficit in our opinion,” Bakker said.

As for this week’s EIA report, there were a few surprises despite the overall injection coming in fairly in line with expectations. Analysts had projected a considerably larger build in the Midwest while the South Central’s build was larger than most had projected.

Broken down by region, the EIA reported a 19 Bcf injection in the East, a 14 Bcf build in the Midwest and a whopping 48 Bcf in the South Central, only 1 Bcf shy of the all-time record in that region. Salt facilities in the South Central added 21 Bcf to gas stocks, while nonsalts added 27 Bcf, according to EIA.

Total working gas in storage as of April 12 stood at 1,247 Bcf, 57 Bcf below last year and 414 Bcf below the five-year average.

While Thursday’s price action sent prices to fresh multi-year lows, some analysts expect to see a correction once the market resumes trading on Monday. Natural gas markets were to close Friday in observance of Good Friday.

Many traders expect prices to rise seasonally in anticipation of summer, according to EBW Analytics. Furthermore, prices in the day-ahead market at Henry Hub are continuing to sell at a premium to most other hubs.

“If liquefied natural gas exports are strong enough, this premium could increase, bolstering futures even if average cash prices nationally continue to sink,” EBW CEO Andy Weissman said.

Meanwhile, oilfield services giant Schlumberger Ltd. management on Thursday pointed to a likely continued downturn in unconventional exploration and production, which could portend a supply response, according to NGI Director of Strategy & Research Patrick Rau.

Halliburton Co., the top completions expert in North America, is scheduled to release its first quarter earnings on Monday, but it too warned earlier this year that the pace of growth is likely to remain slow through at least the first quarter. Appalachian giant Range Resources Corp. is also set to announce its first quarter earnings late Monday.

“Those calls will be the first injection of more U.S. specific data, so perhaps that will add new information to the market that could trigger something of a correction,” Rau said.

At the same time, however, EBW’s model indicates that the current price of the May-November strip would result in end-of-season storage of 3,643 Bcf, a level the market is unlikely to tolerate.

“Predicting how quickly the market will recognize this chronic oversupply condition is difficult,” Weissman said. “Some hedge funds, however, may already recognize that a significant price adjustment is needed. If they decide to aggressively short the market, the price of the May contract could quickly sink another 15-25 cents.”

Cash Sinks Further

Spot gas prices were a sea of red Thursday as mild conditions spread across the East Coast, sending daytime highs into the 60s to lower 80s, according to NatGasWeather. The southern United States was expected to be very warm with highs in the 70s to 90s, with the hottest conditions across Southwest deserts. The western part of the country was also forecast for mild to warm weather.

The comfortable spring setup is expected to last through the week (and likely the rest of the month), making for very light demand outside of the slightly hot southern United States, the forecaster said.

The absence of significant demand has provided the perfect backdrop for the slew of maintenance going on across the country, with the various work failing to garner much price reaction. For example, ANR Pipeline was set to conduct planned compressor maintenance this week on its Southeast Mainline.

The work was expected to limit capacity at the Brownsville Southbound throughput meter in Tennessee by up to 144 MMcf/d on gas days April 22-26, according to Genscape natural gas analyst Anthony Ferrara. Located in the Southwest Southern Segment (Zone 2), the maintenance was to be performed at the Brownsville Compressor Station, which will limit capacity at Brownsville Southbound by 230 MMcf/d, leaving 900 MMcf/d still available.

Despite the weeklong restrictions, ANR SE spot gas fell nearly a dime to $2.395.

In Appalachia, Texas Eastern Transmission (Tetco) was expected to continue maintenance on its Southern 36-inch diameter Line in M3 from Bedford, PA, to Marietta, NJ. It will perform cleaner and inline inspection tool runs from Chambersburg to Marietta Line 2 on April 22, 24 and 26, and then perform the same runs from Bedford to Chambersburg on several days through May 3.

Tetco performed maintenance on this line throughout last week. Normal capacity through the line will be impacted by around 930 MMcf/d and flows could be impacted by as much as about 690 MMcf/d compared to the previous 14-day max, specifically through Heidlersburg, according to Genscape.

“Production in the East has been impacted by maintenance throughout Tetco’s market zones, and these events should add pressure for M2/M3 spreads to widen as M2 exports to M3 demand is constrained,” Genscape analyst Josh Garcia said.

On Thursday, however, the spread remained tight at less than 2 cents, with Texas Eastern M-3, Delivery plunging more than 20 cents to $2.06.

Tennessee Gas Pipeline (TGP) was set to continue pipeline work in northern Louisiana, although the pipeline completed pigging runs on Thursday. TGP’s work on (Caliper and MFL) at mainline valve (MLV) 834 was expected to continue April 23-25. The upcoming procedures will reduce operational capacity through the station by 72% to 196 MMcf/d, a similar impact to the pigging runs last week, according to Genscape.

“The station typically flows close to capacity, averaging 564 MMcf/d outside of capacity restriction in the last 30 days. This maintenance will therefore cut approximately 368 MMcf/d of gas flows beginning this week,” Genscape analyst Dominic Eggerman said.

Nevertheless, prices across the region fell between 5 and 10 cents.

Farther upstream in central Mississippi, TGP will also reduce capacity at MLV 847 by 63% to 237 MMcf/d from April 22-30. “While the constraints can appear significant, gas can be easily rerouted at this portion of TGP’s system. Therefore, broader regional constraints will likely not be apparent,” Eggerman said.

Indeed, prices across much of the Southeast posted significant, double-digit declines.

Additional work on the TGP system was planned in Texas, which would cut gas flows toward Mexico. From April 22 to April 25, TGP will perform emergency shutdown tests at Compressor Station 409 (Donna Line) in Hidalgo County, Texas. Operational capacity through the station will be restricted to 340 MMcf/d, restricting gas flows by about 66 MMcf/d compared to 30-day averages.

“Further impacts are possible as flows have recently hit 30-day highs of 473 MMcf/d,” Eggerman said.

Like the rest of the country, though, spot gas dropped.