Buyers were in the driver’s seat Wednesday as natural gas traded for Thursday delivery fell not so hard, but often. Gulf, Midwest, Rockies and West Texas generally recorded losses of less than a nickel, and a few points made it into the black, but declines were greatest at eastern points as a weak power environment conspired with above normal temperatures to send Northeast prices lower on average by about 20 cents.

Overall the natural gas physical market was down 10 cents to $2.48. Futures prices gave up all of Tuesday’s lackluster gains, and at the close April was down 6.3 cents to $2.723 and May was lower by 7.0 cents to $2.740. May crude oil enjoyed a rebound adding $1.70 to $49.21/bbl.

Forecasts of mild, spring-like weather prompted double-digit declines in the Mid-Atlantic. said the high in New York City on Wednesday of 46 would reach 63 Thursday before sliding to 52 Friday, near the seasonal high. Washington, DC was forecast to see its high of 56 at mid-week reach a balmy 75 on Thursday before falling to 54 Friday, which is 5 degrees off the norm.

Thursday gas bound for New York City on Transco Zone 6 fell 15 cents to $2.54, and gas on Tetco M-3 fell 21 cents to $1.72.

Marcellus points also suffered hefty losses. Gas on Millennium fell 15 cents to $1.38, and deliveries to Transco Leidy shed 15 cents to $1.31. Packages on Tennessee Zone 4 Marcellus came in 11 cents lower at $1.22, and deliveries to Dominion South changed hands down 15 cents at $1.59.

Weak, next-day peak power prices lowered the incentive to make spot gas purchases for power generation. Intercontinental Exchange reported Thursday peak power at the ISO New England’s Massachusetts Hub fell $4.69 to $37.15/MWh, and peak power at the PJM West terminal fell $6.10 to $33.34/MWh.

Buyers in the Midwest said even with winter-like conditions on tap, they saw no reason to purchase gas.

“They have taken the snow out of our forecast and replaced it with freezing rain,” said a Midwest utility buyer. “It’s not going to stay long since the ground is so warm. It’s supposed to be 70 degrees on Monday.”

The buyer was not surprised at the weak prices. “We are not buying in the market right now. Our base load and storage is enough to handle our needs right now.” He expects to start buying for storage within the next month or so. “We haven’t decided if we are going to stick with index or go fixed price, or how we are going to price our purchases.”

Thursday gas on Alliance shed 8 cents to $2.78, and packages at the Chicago Citygates fell 4 cents to $2.74. Gas on Michcon skidded 5 cents to $2.87, and gas on Consumers was quoted at $2.87, down 7 cents.

On Thursday, the Energy Information Administration (EIA) is likely to report the first injection of the season, according to preliminary figures. NGI Director of Strategy & Research Pat Rau studied the previous five comparable storage injection periods and found a wide variation in injections.

“The previous five-year low for this week was a 95 Bcf withdrawal, the highest was a 50 Bcf injection, the average is a 16 Bcf withdrawal, but the median (more typical) figure is a 12 Bcf injection,” Rau said. “That certainly supports the notion we could be slipping into the injection season, based on past history.”

Last year 56 Bcf was withdrawn and the five-year average stands at a 19 Bcf withdrawal. For the week ended March 20, analyst estimates are showing a wide spread. Citi Futures Perspective calculated a 0 Bcf change, and a Reuters poll of 22 traders and analysts revealed an average a 6 Bcf build, with a range of a withdrawal of 7 Bcf to an increase of 25 Bcf. First Enercast Financial predicted a storage build of 23 Bcf.

A New York floor trader said he is looking for a build of 6 Bcf. “We are right around the build/draw area at 6 Bcf, but if it comes in a draw, forget it. The market will rally on that. If we come in [Thursday] at 9 a.m. and the market is lower, that doesn’t look good, but if it starts off on a rally and the number comes in a draw, the market will rally.”

Despite the soft finish to the futures, traders were optimistic prices may rebound back to $3.00. “Short term, long term the gas is going to get back to $3,” the trader said.

WSI Corp. in its Wednesday six- to 10-day outlook said the “period forecast is warmer than the past forecast over the southern and eastern U.S., especially the Southeast. The Northwest and north-central U.S. is a bit cooler. This is due in part to the day shift. Period GWHDDs dropped another 3.8 to 62.6 for the CONUS. Forecast confidence is considered average at best. Medium-range models continue to display key technical differences with the pattern and potential phasing of disturbances over the East.”

Analysts are rethinking the weather-storage dynamic and sense that in the short run there may be more room for storage than previously anticipated.

The latest model “featured colder changes from late next week through the start of the week of April 6, leading to net colder changes overall,” said Teri Viswanath, director of commodity strategy at BNP Paribas, in a Tuesday note. Monday morning models “were leaning toward a faster shift toward a warmer pattern at the start of April,” but “it now appears that the spring-time warm-up has been delayed to mid-April.

“While the industry will likely report the first net injection for the season for the week ending March 20, this prospect of lingering heating demand in April suggests a slower start to the injection season. With ostensibly more room to accommodate surplus supplies, traders appear to be having second thoughts about the injection season ahead. Having said this, based on the continued strong production receipts on the pipelines, we are less convinced that surplus production can be easily managed this summer. For the week ending March 20, interstate pipeline receipts suggest that Appalachia gas production is still within 0.3 Bcf/d of the all-time high recorded at the end of December.

“Based on the unanticipated surge in supply over the winter, we now see an even greater need for accommodation in the upcoming low-demand summer months,” Viswanath said. “This much-needed adjustment, however, will probably not be achieved by a reduction in supply. Despite the steep year-to-date decline in gas-directed rigs and announced curtailments from the Marcellus, we expect that domestic production will increase more than 1 Bcf/d this summer from the recent record winter-time volumes.”

Two primary drivers are spurring growth, she said. There is a “backlog of wells that have been drilled but not yet completed,” combined with an “increase in drilling efficiency.” And despite an announcement Tuesday by Chesapeake Energy Corp. that it would reduce the number of wells it brings online this year, “we see little follow-through from other producers in the region to suggest an imminent decline in production.”

Tom Saal, vice president at INTL FC Stone in Miami, in his work with Market Profile notes that the mode price on the monthly distribution comes in at $2.802. “Note the $2.802 mode, or most popular price; the last time the market traded in this range around March 2012. Buyers be ready,” he said in a morning note to clients.