Somewhat surprisingly, most points outside of California and the Rockies/Southwest basins were able Wednesday to pull out of the price tailspin that had dominated this week’s market. Flat to mildly higher or lower numbers were prevalent in most areas. However, California continued to plunge in triple-digit amounts except for border-SoCalGas quotes, which fell only about 30 cents. The Rockies and Southwest basins generally were down from about a nickel to 20 cents.

However, a general downhill slide was expected to resume today after AGA announced a humongous 102 Bcf in working gas storage injections last week (another 1 Bcf of base gas was returned to the ground in the Producing Region, eliminating the deficit that had built up during March in that category). The screen weakened in response, finishing down more than 15 cents on the day, and sources said cash is likely to follow suit today.

“That’s just about exactly where we thought the storage report would be,” said the Northeast trader for a large marketer. “Next week we’re expecting an even higher injection volume, which should keep things bearish for quite a while longer.” The Northeast market area is in the midst of a minor heat wave that is setting date-specific high temperature records in some cities, he noted, but that will be fading away by the weekend and is having relatively little market impact. “Some people tried to push prices quite a bit higher in [Wednesday’s] early trading because of the heat, but then prices came back down pretty quickly.”

A Texas source said falling prices have created extra room for storage injection demand, “but there’s just so much gas floating around looking for a home.” At least the economics are getting better for processing operations again, he added, and crude prices are staying fairly strong. Overall the short-term market outlook looks pretty weak, but over the long haul prices should start going up again, he concluded.

Thomas Driscoll of Lehman Brothers sounded a somewhat similar theme. The accelerated momentum of injections “implies that we could get well over 3,000 Bcf in storage by the end of October.” But that won’t happen because as gas prices keep falling, “we will recapture demand” that was lost during the period of more expensive gas, he said.

Although a renewed downturn is widely expected in the general market, one western trader is expecting a rebound in California numbers today, citing rising June basis. At this point he is projecting $13.40-50 prices for next month for border-SoCalGas supplies despite the pounding that the June futures contract has taken lately.

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