Prices continued to drift lower at nearly all points Thursday, but the rate of decline slowed. Whereas double-digit drops had ruled the market Wednesday, most of Thursday’s softening was by less than a dime. Minuscule losses of only 2-3 cents were scattered through several market areas, and Northwest’s domestic and Sumas points managed to stay flat and eke out a small gain respectively.

The Midwest and Northeast garnered the lion’s share of declines of a dime or a little more. The Midwest was warming up rapidly, with highs ranging from the mid 60s to the low 70s in Cincinnati, Chicago and Minneapolis. Some chill was still hanging around Thursday in the Northeast, as New York City and Boston both had overnight lows just above freezing. However, on Friday those lows are expected to be at 40 degrees or more, and highs were predicted in the low 50s for Beantown and around 60 for the Big Apple.

Meanwhile, an increase in air conditioning load may have helped prompt the slowdown of the price slide that began Wednesday. Parts of the desert Southwest recorded highs in the 80s Thursday, while highs on either side of 80 degrees ranged from New Mexico through most of Texas and into the Midcontinent and Lower Plains. Omaha was predicted to see highs around 80 both Thursday and Friday. Houston and Dallas were expected to record peak temperatures in the low 80s Friday.

According to The Weather Channel, weekend temperatures will range from five to 20 degrees above normal in most parts of the U.S.

The Energy Information Administration’s report of an overall 15 Bcf storage injection last week jibed fairly well with most prior expectations. What was most interesting was the East region’s return to a net withdrawal, with stocks going down by 4 Bcf there after a 3 Bcf injection was announced for the region in the previous week’s report. However, one source said it’s not too unusual that the East would slip back into net withdrawal mode. “It was still pretty cold” last week, he said, adding that in addition, Northeast utilities usually have a relatively slow pace of injections in April and can occasionally still have a net withdrawal during the month, as evidenced in Thursday’s EIA report.

The screen initially treated the report as moderately bearish (see related futures story), and for a while appeared to resist the chance to follow the major strength in the oil product trading pits higher. Natural gas futures eventually did venture briefly into mildly positive territory, but wound up the day a penny lower. Production problems at some Texas refineries reportedly caused jitters among oil traders because of the rapidly approaching summer driving season, causing them to send crude oil, heating oil and unleaded gasoline sharply higher. Crude for May was starting to near the $38/bbl mark, rising 85 cents to a $37.57 settlement after an intraday high of $37.65.

A Northeast utility buyer acknowledged that area weather remained chilly at night but said it was fairly mild during the day. Temperatures likely would be up in the 60s this weekend, he said. Barring extreme circumstances, the buyer doesn’t see any possibility of a price rally within the next week because of weak fundamentals. “Storage is in good shape, and we have to wait a few more weeks” to get a gauge on how summer will turn out in terms of heat and hurricane interruptions of production, he said.

The buyer commented that much aftermarket trading often ignores fundamental factors, “but the fundamentals tend to play a stronger role as bidweek gets closer.”

Lehman Brothers analyst Thomas Driscoll, who accurately called the 15 Bcf storage injection in advance, said last week’s weather was 29% warmer than the 30-year norm. “Over the last four weeks, withdrawals have averaged 3 Bcf per week stronger than expected. If we were to see a repeat of last year’s refill pattern, when storage injections totaled 2,470 Bcf and cooling requirements were near normal, storage could theoretically exit the refill season [on Oct. 31] near 3.5 Tcf.”

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