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Bearish Results do not Hinder Bullish Outlook

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 Gulf region.

"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] spikes."

"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 level.

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