Pressured by another wave of follow-through selling, natural gas futures funneled lower for the second day in a row Wednesday, as traders grappled with negative technicals and continued to factor in a bearish storage report. A late rebound trimmed the day’s losses, leaving the prompt May contract with a 10-cent decline at $5.148.

The biggest news of the day was the from the American Gas Association, which at 2 p.m. EST announced that a whopping 64 Bcf had been injected into underground storage facilities last week, bringing working gas levels to 21% full at 705 Bcf. The injection figure exceeded even the most ambitious of refill estimates, ranging as high as 50 Bcf, and greatly surpassed the 14 Bcf injection reported last week and last year’s 25 Bcf refill. Over the past two weeks, the year-on-year storage deficit has shrunk 25% from 404 Bcf to 303 Bcf, giving traders confidence that the storage situation may not be as dire as it was once thought to be.

The market is seeing a whole new storage strategy on the part of LDCs who turned up their noses last spring at the then-$4.00 price levels, electing to wait to fill later in the year at lower prices, consulting firm PACE Global Energy Services suggested in a recent report. After a dose of $10 prices last winter, $5 looks good, and those once-dilatory LDCs are busting down the doors to fill storage NOW. Add to that the new powergen market players, and it’s a whole new storage ball game (see separate report, this issue).

While a technical follow-through on the heels of May’s break beneath its 40-day moving average (see Daily GPI, April 18) certainly helped make life easier for bears, it was not the sole factor in Wednesday’s price erosion. Sources were also quick to point to higher and higher refill predictions, which were circulating throughout the day, as reasons for the slide. While estimates ranged from 10-40 Bcf on Tuesday evening, Wednesday morning brought expectations in the 30-50 Bcf range, a source told NGI.

Looking ahead, George Leide of New York-based Rafferty and Associates was unfazed by the two-day, 50-cent selloff, which he chalked up to the market correcting itself within its recent trading range. That said, he looks for the market to rebound slightly Thursday, adding that a break above Tuesday’s low of $5.215 could lead to a move to the $5.29 or possibly the $5.43-46 area. On the downside, Leide would be prompted to short the market on a break beneath an hourly trendline, which for the first hour of trading Thursday is seen at $5.05. The slope of that upward trendline, Leide continued, is a penny an hour.

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