Impressed with their handiwork following Tuesday’s positivemarket momentum, Nymex bulls were on the offensive again yesterdayas they loaded up on long positions ahead of yesterday’s storagereport. After opening at Tuesday’s high of $2.77, the Aprilcontract rumbled higher yesterday morning only to tumble back intothe $2.70s in the afternoon. The prompt month closed up 4.3 centsat $2.794.

As expected, yesterday’s release of fresh storage data was thefocus of commercial traders yesterday, and several sources said anupward revision of storage withdrawal expectations to the 70-80 Bcflevel was at the heart of the morning advance. But trade buying wasnot solely responsible for the gains. After opening higher, themarket was hit with a wave of local and speculative buying whichtook the April contract to $2.815 and in doing so filled in thesmall chart gap created by Friday’s $2.78 low and Monday’s $2.775high.

According to the American Gas Association, 62 Bcf was withdrawnfrom underground storage facilities last week, decreasing totalworking gas in storage to 1,064 Bcf or 33% full. While that figurewas twice the takeaway seen last week, it paled in comparison tothe 87 Bcf of a year ago. The oft-quoted year-on-year storagedeficit now stands at just 308 Bcf down from a peak of 522 justfour weeks ago.

Looking ahead, a Gulf Coast risk manager questions whetherfutures will be able to break out of the recent $2.70-90consolidation phase between now and the beginning of the three-daysettlement period next Monday. “The market failed prettyconvincingly at the $2.90 level last week. If we are to move out ofthe range it will likely be to the downside, but in order for thatto happen cash prices must come off,” he said.

Cash prices, however, have seemingly defied the laws of supplyand demand all month as mild temperatures have not equated to lowerprices. “The phenomenon we are witnessing is incremental storageinjections in the producing region offsetting turned back volumesfrom the Northeast. The swing pools in the Gulf aren’t showing aglut right now. The question becomes: will they when temperatureswarm up this weekend?” he said.

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