On the heels of bearish storage data released yesterday afternoon and ahead of the three-day weekend, gas futures tumbled lower for the second time in the last eight trading sessions Wednesday as speculative longs headed for the exits. The May contract was thehardest hit by the selling. It tumbled 17.4 cents to close at $5.385. Nearly as battered was the 12-month strip, which took back 15.2 cents of its recent advance toclose at $5.479.

According to the American Gas Association (AGA), 14 Bcf was injected into underground storage facilities last week, boosting working gas levels to 641 Bcf or 19% full. Leading up to the release, there had been much speculation as to whether the AGA would announce a net withdrawal or an injection, with the balance of opinions pointing to the latter. Storage is now 392 Bcf lower than last year’s level and 333 lower than the five-year average.

For many traders the hardest part to swallow was the 1 Bcf withdrawal in the East, which is where many believed storage operators would be content to rely on baseload or swing gas purchases. One possible explanation is that a New York utility, in order to justify a rate increase to its public utilitycommission, was pressured to withdraw every molecule it could of low cost storage supply throughout March and into early April, said one trader.

However, slightly bearish storage numbers were not the only reason for the market’s performance Wednesday. According to Cynthia Kase of New Mexico-based Kase and Company, the big up-day last Thursday followed star chart formations Friday through Tuesday. That set the stage for a reversal Wednesday. Formed when the open and close on a given day are in close proximity to each-other, a star formation is indicative of hesitation and uncertainty in the market, she explained. To complete the bearish cycle and turn this market back lower, the May contract would have to close below $5.32 today, which represents the midpoint of the break higher last Thursday. Alternatively, the trend will remain bullish if prices close above $5.32 Thursday, Kase said.

Turned back supplies by East Coast utilities planning for milder temperatures this weekend spawned early softness in cash prices, a Houston-based risk manager told NGI. And while those “milder” temps could crank up a few furnaces in the Northeast, the loss in air conditioning demand in the Southeast will more than make-up the difference. “When you start to see such high profile sellers early in the cash market, you know price declines are imminent,” he added.

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