In response to pressure from the market and Nymex, the AmericanGas Association last month announced that it would move forward therelease of its weekly gas storage data. Some traders and analystspredicted the change would increase liquidity, but most observersbelieved it would have little or no impact on the market. In fact,some market watchers even said the early release would decreasevolatility because of the natural efficiencies inherit in Nymex’sopen outcry trading system.

Hogwash. For the third Wednesday in a row since the change wasmade March 1, the release of fresh storage data had an immediateand dramatic effect on the futures market. After trading in themid- to high $2.70s for much of the session, the April contractspiked precipitously in the final hour of trading to notch a newlife-of-contract high at $2.885 before closing at $2.866.

According to the American Gas Association, 31 Bcf was withdrawnfrom underground storage facilities during the week ending March10, depleting stocks to 1,126 Bcf or 35% full. And while the 31 Bcfwas not bullish when compared to last year’s 134 Bcf figure, oreven the six-year average of 77 Bcf, it was bullish compared to the29 Bcf withdrawal AGA initially reported for the week ending March3.

However, buried in the footnote of yesterday’s report was acorrection for the survey week ending March 3: “Revisions to datasubmitted by two companies last week has cause AGA to revise theestimates for working gas in storage in the Producing Region,Consuming Region West and Total US for the week ending March 3,2000.”

The report released last week overstated storage levels in theProducing area by 9 Bcf while understating the Consuming West by 1Bcf, netting an 8 Bcf downward revision from 1,165 Bcf to 1,157Bcf.

A Gulf trader was quick to note that the revision shone somelight on yesterday’s surprising withdrawal. “Everyone was expectingthis week’s withdrawal to fall short of last week’s. The weatherwas milder and it was less economical to pull gas from the ground.It makes a lot more sense to find out last week’s withdrawal (37Bcf) did exceed this week’s (31 Bcf),” he said.

A witty Calgary trader took a slightly different tack. Thestorage report was perceived as bullish because it fell short ofmarket expectations, which were based in part on last week’sunderstated withdrawal figure. Had that report been higher, thenexpectations would have been higher, and the actual report released[Wednesday] would not have been such a shock, he said.

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