The cash market began what several sources believed could be a fairly lengthy period of downward price consolidation Wednesday. Numbers generally fell between a dime and 20 cents in eastern markets and at Permian Basin/Waha and Pacific Northwest points, while other western prices took an even heavier beating.

The chief instigator of the negative price outlook was yet another 100 Bcf-plus storage injection report from AGA (specifically, 106 Bcf for the week ending June 15), which handily surpassed virtually all prior expectations. An already softer screen fell nearly 15 cents further in the aftermath of the report’s slightly premature release (see related story).

Traders tended to agree that prices are nearly certain to keep falling for the rest of this and likely through next week as well because the latest six-to-10-day forecast from the National Weather Service indicates that any patches of above normal temperatures will be insignificant. NWS also predicted below normal readings for about half of the Southeast next week.

“What you have to be really worried about, assuming there are no hurricanes or other types of supply disruption, is that some people now are looking for full storage by mid-September,” said a Gulf Coast marketer. Such a development would mean a free-fall period for prices in the last 45 days before the November start of withdrawal season, he said, and some serious softness likely would precede that period as traders anticipate the massive drying up of markets. The 2001 market appears to be retracing 2000’s price pattern in the opposite direction, the marketer concluded.

An intrastate Texas trader noted that what was expected earlier this year to be a tremendous clash of competition for gas supplies between storage buyers and power generators by now “simply hasn’t happened.” It was a cool spring and still not much of a hot summer yet, he said. “We’re getting moderately hot daytimes in the South, but evenings are cooling off enough to keep normal UEG [utility electric generation] load from developing to the levels that we would normally expect for this time of year.”

Triple-digit temperatures kept lingering Wednesday for most of inland California, one western source said, but gas prices there still softened by more than the overall average. “It’s because there isn’t as much of a crisis atmosphere as before about threats to the California power grid,” he added. A lot of generation that wasn’t online previously has returned to service, keeping big problems from developing, the source said.

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