Primarily building on upward momentum from the day before and an initially higher screen, the cash market continued to push higher Wednesday with gains that were mostly within a few cents on either side of 20 cents but tended to be greater in the Rockies.

However, a larger than expected storage injection report signaled that a sharp reversal is due today. That perception was reinforced by a steep futures dive Wednesday afternoon, a retreat in late cash deals and on-line trading for Friday indicating that drops of a quarter or so are in store.

Evidence of the plunging prices to be expected in today’s activity came from two disparate markets. A Northeast buyer who said he hadn’t expected to see $3-plus numbers in his region again before December (he averaged in the mid $3.00s Wednesday at Transco Zone 6-NYC) said EnronOnline was trading that point in the $2.70s for Friday after the AGA report came out. In addition, his last two Texas Eastern M-3 deals were in the mid $2.90s following earlier trades in the low $3.00s.

On the opposite coast, a trader quoting a PG&E citygate range from the mid to high $2.60s said the storage figure (63 Bcf injected last week, according to AGA) was already starting to quash balance-of-month prices. Citygate baseload had been around $2.65 in the morning, he said, but fell to $2.40 that afternoon. He noted that the utility had been projecting linepack below its minimum target Tuesday, but Wednesday’s expectations over the next few days were all well within normal operating levels.

“There’s no doubt of a pretty big price plunge Thursday,” a Midwest/Midcontinent marketer said. Weather is not price-supportive at all, either in terms of cold or tropical storm-wise, he said. A utility buyer concurred, saying he was still seeing a fair amount of heating load for Thursday in the Northeast but that forecasts called for a warming trend to continue each day starting Friday.

An Oklahoma marketer thought many people were reassessing earlier expectations of an AGA injection volume in the 40-50 Bcf range as the morning wore on. “The screen was already in retreat during late cash trading,” she pointed out, “and that probably influenced late cash deals to go lower.”

A Calgary-based producer said, “We figured that this was going to be a short-term spike from the two-day cold front and the SSB [Salomon Smith Barney weather] forecast, so we sold while the selling was good. Cash just was not going to be able to go up indefinitely given the huge storage out there. Some people are disregarding the AGA nowadays, I guess it’s so late in the [injection] season that if they add 40 or 60 [Bcf], it is of little consequence to some. We thought it would come in at 51, so it’s good because we expected a higher number than most, but we didn’t think it would be that high.”

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