Bearish Results do not Hinder Bullish Outlook
Normalizing weather caused cash prices at most points to drop a
few cents to nearly a dime yesterday with the Chicago points
accruing the largest losses, but the downturn failed to abate
marketers' optimism, which was buoyed by a new six- to 10-day
forecast calling for below-normal temperatures for a large portion
of the nation.
After reaching the high $2.20s on Friday, the Chicago Citygate
traded down 12 cents Monday. While only experiencing 40-degree
temperatures last weekend, Chicago reached 50 degrees yesterday and
is expected to climb into the mid-60s by Wednesday. Other
Midcontinent and midwestern spot points lost ground as well
yesterday, falling six to eight cents.
Although warmer weather may have caused a drop yesterday, one
Midcontinent marketer said it will give prices an upward push in
the very near future. The National Weather Service (NWS) is
forecasting below-normal temperatures for much of the Midcontinent,
including the Mississippi and Ohio Valleys, and the entire East
"In general, I think prices will not only rise due to the lower
temperatures, we could see some real spikes. The whole market is
storage-driven. Right now some people think we're in an injection
season, while others think it's still withdrawal season. If this
forecast holds up, the two upcoming AGA reports will show a
dwindling injection amount and might even cross over into a
withdrawal situation. This could cause some confusion at some
facilities, and I wouldn't be surprised to see some [price]
"This market is getting into its roller coaster stage again,"
said a Gulf Coast trader who saw waves of buying and selling
influence prices in both directions Monday.
In the West, California prices stayed flat or gained a penny,
bucking the downward trend. One source said western price firmness
was due mostly to higher electricity prices. He heard California PX
was selling in the mid $20/MWh range but then popped up to the $40
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