Cash prices fell by double-digit amounts at all points Wednesday as cooling demand across the southern U.S. proved unable to withstand the loss of prior-day screen support and mounting bearishness about storage.

Points in the West were well out in the lead of the overall descent that ranged from a little less than 15 cents to more than 75 cents. All points are now around half a dollar or more below first-of-month indexes, with dollar-plus deficits to index running at all Northeast citygates and at most Gulf Coast and Midwest points.

Despite late-week warming trends being forecast for the Midwest and Northeast, the relatively minor additions of power generation load to run air conditioners are unlikely to keep prices from continuing to sink Thursday, according to one source. He noted that the natural gas screen, which was down less than 2 cents Tuesday, had plunged by nearly 30 cents Wednesday. And instead of petroleum-based futures disengaging from the natural gas contract again as they had with strong gains Tuesday, this time they joined gas in rout mode following bearish inventory reports Wednesday morning. July crude oil plunged nearly $2 to less than $70/bbl.

In addition to consensus expectations of another big storage injection on the order of 90 Bcf or so being reported for last week, the industry got more hints of rapidly filling storage potentially leading to a price crash at some point this summer. Southern Natural Gas followed through on its notice earlier in May that restrictions on interruptible storage transactions might become necessary by actually implementing such restrictions Wednesday (see Transportation Notes).

As of May 18 Southern had 44.1 Bcf in its two storage facilities (Bear Creek in North Louisiana and Muldon in Mississippi), or 74% of the pipeline’s total 60.0 Bcf in working gas capacity. That compares with 29.4 Bcf (49%) on May 19, 2005 and 27.6 Bcf (46%) on May 20, 2004.

A marketer said Texas Eastern is also indicating that it doesn’t have much injection capacity left.

The Southern California border, which had managed to climb by 15 cents Tuesday in spite of a SoCalGas high-linepack OFO, succumbed to the negative price pressure of the utility extending the OFO through at least Thursday by sending border quotes nearly 70 cents lower Wednesday. Kern River continued to report high linepack systemwide.

Other pipeline companies likely could empathize with Duke Energy’s notice that as the long holiday weekend approaches, its three interstate pipes (Texas Eastern, Algonquin and East Tennessee Natural Gas reminded shippers and meter operators that their systems have limited ability to absorb due-shipper imbalances. None of the trio will accept nominations creating due-pipe imbalances during the holiday weekend, and they asked customers to resolve existing due-shipper imbalances.

The Northeast and Midwest should remain fairly moderate Thursday but will be on the verge of beginning to warm up. Most of the Plains states will already be hot, according to The Weather Channel. Highs in the 80s and 90s will be widespread again in the South, it added. It will be status quo for the West — pretty cool in the more northerly mountain areas and scorching hot over most of the region’s southern half.

Prices will be down again Thursday, a marketer in Texas confidently predicted, and a big storage injection number could accelerate the softening trend Friday. Despite the rapid refill, it has made sense to inject just about every day this month because of the big premium held by Nymex’s winter strip contracts over near-month numbers, he said. Chicago will be in the 80s this weekend, so cooling load will be rising there and in other parts of the Midwest, but the long holiday weekend should keep prices softer again Friday, he said.

As bidweek officially got under way with the start of the three-day countdown to futures settlement, the marketer said he was seeing “more sellers than buyers” for June. He was hearing basis of minus 24-21 cents for the Chicago citygate. He hadn’t done any fixed-price deals, but said an online service showed Chicago trading in the low $5.80s. Other fixed-price deals were in the mid $5.40s at the PG&E citygate and nearly 30 cents less than that at the Southern California border, he said, adding that a “lot of volume” had already been traded for border delivery.

A producer who trades the Northeast said it has been “pretty cool” there in the evenings lately, but some heat is due early next week. Production-area prices have been stronger than market-area numbers because of Southern heat, he said. Usually he has been still able to cover variable costs of transport, but it’s tight, he said. Transport could be a penny in the money or a penny out of the money on any given day.

The producer said he expects Thursday to be the really heavy day in bidweek trading. He also thinks most people will try to finish June business before breaking for the Memorial Day weekend. He reported basis deals Wednesday of plus 52 cents for Texas Eastern M-3, plus 32 cents for Dominion and plus 30 cents for TCO (Columbia Gas in Appalachia).

The Reuters news service survey of 22 industry players found an average of 89 Bcf in storage injection estimates. The overall range reported to Reuters was 74-105 Bcf. Jay Levine of enerjay, LLC in Portland, ME said he was near the low the low end of expectations at 77 Bcf. On the other hand, Jim Osten of Global Insight predicts storage builds of 100 Bcf for the week ending May 19 and 95 Bcf for the week ending May 26.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.