Bowed

The cash market finally bowed to futures weakness by falling at nearly all points Thursday despite some increases in heating load due Friday. Even with low temperatures predicted to reach sub-freezing levels at some locations in the northern sections of the South, it appeared that many buyers preferred to start tapping their storage accounts rather than procure more expensive spot gas.

The cash market again bowed to a general lack of substantial cooling load and further prior-day futures softness in recording losses at all but one point Thursday. Modest warming trends in the Rockies and western Midwest were due to spur little additional power generation demand for gas.

After nearly a week and a half of run-ups at all or nearly all points in the face of relatively little weather-based demand, the cash market finally bowed to the reality of its lack of fundamental support Wednesday by softening at a majority of points. The declines occurred despite substantive prior-day screen support in the form of Tuesday’s 14.7-cent gain by June futures. That likely limited most drops to about a dime or less.

Prices continued to fall at a slight majority of points Friday, but the Midcontinent joined nearly all of the West in rebounding. Most eastern markets bowed to generally moderate to cool weather and the previous day’s 12.7-cent decline by the new prompt-month November futures contract. A cool Midwest was due to start warming up again over the weekend, which helped explain the Midcontinent gains, but market-area quotes were softer.

Despite nearly 1.3 Bcf/d of offshore production being taken off the market due to a storm system in the Gulf of Mexico (GOM), cash prices bowed to a major prior-day futures drop and generally weak weather fundamentals as nearly every point outside the Rockies fell Thursday.

Unified price movement returned to the cash market Friday, and the direction was downward in a big way. Spot quotes bowed to relatively moderate late-summer weather trends in most areas (either existing or in the weekend forecast), prior-day futures weakness, the weekend drop of industrial load and new indications that little storage injection capacity remains with nearly two months left to go in the traditional injection season.

The cash market finally bowed — but not totally — to the reality of weak weather fundamentals and the steadily diminishing possibility of Tropical Storm Florence even reaching North America, much less the Gulf of Mexico. Although a majority of points recorded moderate losses Thursday, there were still quite a few that were flat to a dime higher.

Post-weekend prices bowed to weaker weather fundamentals in recording mostly moderate losses, from a mere couple of pennies to a little more than 15 cents Monday (a couple of flat to slightly higher points managed to creep into the overall mix). A solid majority of declines were in single digits.

Putting hurricane worries aside for at least the weekend, traders bowed Friday to near-term forecasts of mild to cool weather in most of the U.S. and Canada and the bearish day-later reverberations of a storage injection report that wasn’t much shy of 100 Bcf. Nearly all points recorded double-digit losses; the overall range was from less than a dime to 30 cents.