Bearish 54 Bcf Storage Injection Helps Futures Continue Slide, reports NGI.

DULLES, Va. -- After trading lower in the overnight Access session, June natural gas futures continued to fall Thursday morning, sparked by the combination of a modestly bearish natural gas storage injection and a June crude oil futures contract that had slipped below the psychological $50/bbl level.

The Energy Information Administration (EIA) reported that 54 Bcf was injected into underground natural gas storage for the week ended May 6. While the number was bullish when compared to last year's 75 Bcf injection and the five-year average build of 72 Bcf, it was considered somewhat bearish when measured up against industry projections.

A Reuters survey of 18 industry players pinned the average build estimate at 45 Bcf. The ICAP-Nymex storage options auction, which runs from 3-4 p.m. EDT on Wednesday, revealed a consensus forecast of a 46.6 Bcf injection.

The prompt month fell even lower after the report. June natural gas slumped another 10.5 cents to trade at $6.45/MMBtu, the lower boundary of its recent trading range and 23.3 cents lower than Wednesday's settle. As of noon EDT, the prompt month was trading at $6.535/MMBtu. June crude was still under $50 at $48.80/bbl.

The question now becomes whether natural gas futures will be able to break to the downside out of its recent mid-$6.40 to mid-$6.70 range.

"You haven't seen anything yet," said Ed Kennedy of Commercial Brokerage Corp. "The general trend in all of the energies is down and background noise from crude is a lot down. I think you're going to see something closer to $45/bbl over there. The fundamentals are overwhelmingly bearish here and this storage report really puts the icing on the cake. I think in natural you're going to go down and test something close to $6.35."

Kennedy along with Commercial Brokerage Corp. partner Tom Saal and local market-maker Sandy Trot of EnergyLinks LLC. are hosting a two-day Natural Gas Futures Workshop at NYMEX June 22-23. For more information go to http://gasmart.com/workshop.

Following the EIA's report, working gas in storage now stands at 1,509 Bcf. Stocks are 217 Bcf higher than last year at this time and 275 Bcf above the five-year average of 1,234 Bcf, according to the administration. The East Region injected 28 Bcf for the week, while the Producing and West regions contributed 16 Bcf and 10 Bcf, respectively.

The EIA also reported that the format of the Weekly Natural Gas Storage Report (WNGSR) will change with the report released on May 19. The changes were made due to the new policy that allows for a release of revisions if necessary to weekly storage estimates on any federal workday. The new format of the WNGSR includes an additional line of text in the title immediately preceding the table, and allows for the possibility of revisions in the current as well as prior report weeks.

About the Natural Gas Futures Price Workshop

Where's the market going? And what can you do about it? These questions and more will be answered by experts who will be taking time off from active natural gas futures trading, in a repeat of their very popular futures workshop, at the New York Mercantile Exchange (NYMEX) June 22-23, 2005.

About Intelligence Press Inc.

Intelligence Press Inc., commonly referred to as NGI by the energy industry, is an independent publishing company and has been serving the energy industry since 1981 with news and pricing information for the natural gas market on its website at http://intelligencepress.com and in its publications: Natural Gas Intelligence, Daily Gas Price Index, Weekly Gas Price Index and Power Market Today.