The rapid pace of gas injections into the nation’s storagefacilities this spring (9.4 Bcf/d, or 5.4 Bcf/d greater than overthe same period last year) and the current massive surplus ofstored gas (331 Bcf) compared to levels at the same time over thepast four years prompted Wefa Inc. to turn extremely bearish onspot prices. The additional storage this year is equal to 5% ofdemand for the remainder of the non-heating season, Wefa said inthe May edition of its Natural Gas Monthly.

“.[G]iven the current rate of storage build-up, there is a goodpossibility that prices could be lower than last year – even withwarmer than normal weather,” the firm said. It also noted recentweather forecasts are now calling for milder temperatures thissummer, there is less concern about coal delivery problems andforecasts point to normal hurricane activity.

Wefa is now calling for prices this summer to be flat to summer1997 or lower, which is down significantly from its previousforecast. In its April report, Wefa was calling for this summer’sprices to be 30 cents/MMBtu more than prices last summer. The firmis now predicting Henry Hub prices will drop to $2.07/MMBtu inJune, will average $2.15 in July, $2.25 in August, $2.34 inSeptember and $2.27 for the year, down from $2.41 for the year inits April report and down from $2.52 in 1997.

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