Bearish

Last week’s sole rally on Thursday proved to be short-lived as a bearish mood returned to the market Friday. Most points fell anywhere from 2-3 cents to half a dollar Friday as a prior-day gain of 21.6 cents by November futures proved no match for weekend warming trends in the South and Northeast and the usual decline of industrial load over a weekend in vying for cash price influence.

Friday’s trading made it a full week of bearish domination in the cash market. Prices fell at nearly all points again as hot-weather fundamentals remained relatively moderate for the most part, Atlantic tropical activity was essentially nonexistent and the usual weekend loss of industrial load played a part.

As expected, declining cooling load, a bearish storage report, the previous day’s drop of a little more than a quarter by July futures and the reduced industrial demand associated with a weekend ganged up on the cash market Friday to push prices lower by sizeable amounts at all points. Several OFOs or similar actions and excess supply constraints exacerbated the situation in the West, resulting in plunges of about a dollar or slightly more at some locations in the region.

Although continuing moderate weather almost everywhere outside the mountain areas of the West and bearish expectations of another subpar storage pull made it seem unlikely, the cash market achieved gains Wednesday at all but two points. One source could only speculate that there must have been some storage-futures spread purchases in play because he saw little serious heating load for Thursday except in parts of the West, Upper Plains and northern New England.

The January aftermarket got off to a weak start with declines at a solid majority of points as bearish weather is expected to extend through at least mid-January. Losses ranged from a couple of pennies to about 45 cents.

As expected following Thursday’s modestly bearish storage injection report and the subsequent screen plunge, prices saw double-digit declines at all points Friday. The fact that outside the Rockies and Upper Plains cold weather forecasts only occasionally called for below-freezing lows, and the drop of industrial load that accompanies a weekend trading period, also contributed to cash market weakness.

Most of the cash market was falling again Wednesday as weather and storage fundamentals remained bearish. However, several western points (primarily in the Rockies) were flat to a little more than a quarter higher. The majority of losses ranged from about a nickel to 30 cents or so.

Natural gas futures trading on Wednesday mimicked Tuesday’s lackluster performance. Bulls were wary of bidding the market up in the face of bearish fundamentals, while the bears weren’t ready to risk testing the lower $5 level with winter just a few short months away.

After absorbing the inconsequential natural gas storage report for the week ended Aug. 25, October natural gas futures traders, staring at nothing but bearish fundamentals, pushed the market lower Thursday, briefly plunging the prompt-month below the psychological $6 price level. October natural gas ended up closing out the day at $6.048, down 24.2 cents.