The price see-saw continued yesterday in the natural gas pit atNymex as traders made quick work of Tuesday’s advance with a latesession sell-off. The August contract was dealt the most severeblow, tumbling 16 cents to finish at $3.884. Estimated volume wasmoderate, with 71,148 contracts changing hands.

Traders agreed that Wednesday’s erosion was in reaction tocontinued mild weather in the eastern U.S. along with anotherrelatively large storage injection figure.

According to the American Gas Association, 70 Bcf was injectedinto underground storage facilities last week, increasing totalworking gas to 1,803 Bcf or 55% full. While last week’s 70 Bcfrefill fell short of both the five-year average of 72.4 Bcf andlast year’s 78 Bcf, it was larger than several large commercialestimates.

“This was a case of failed expectations,” said Ed Kennedy ofMiami-based Pioneer Futures. “While the consensus predictionscentered on 65-75 Bcf, there were several large Houston tradingdesks that were positioned for an injection of 65 Bcf or less. Whenthat number failed to materialize, they sold it,” he said.

Another factor that undoubtedly played into traders’ psycheyesterday was that the year-on-year comparison going forward favorsshrinkage of the current 436 Bcf shortfall. Last year’s comparableinjections going forward are 41 Bcf, 26 Bcf, and 45 Bcf and manytraders believe the market will have an easy time beating thosenumbers this year.

“[Storage] is like a balloon, as you fill it up, it gets harderand harder to put more in,” explained Kennedy. While storage isjust over 50% full now, it was nearly 70% full a year ago. “If theweather from Chicago to New York stays mild, we could continue tosee 70-75 Bcf injections over the next 3 weeks,” he added.

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