Firmness

As a marketer had correctly predicted, the cash market was unable to sustain Tuesday’s brief burst of firmness and was down at nearly all points Wednesday. The previous day’s 4.1-cent drop by September futures played a minor bearish role, of course, but it was primarily the subpar late-summer cooling load and continuing warnings about storage facilities soon being unable to accommodate further injections in many locations (see related story) that drove most quotes downward.

Price drops at nearly all points Wednesday appeared to be at least partial justification for some traders’ belief that the overall firmness on Tuesday was not justified by weak weather fundamentals and the previous day’s futures decline of 12.8 cents.

The latest blast of winter cold in much of the East is proving to be short-lived, and so are the two days of price firmness that it caused. Numbers dropped at nearly all points Thursday as a warming trend was forecast for the Midwest and cold temperatures were due to ease slightly in the Northeast. While colder conditions would continue spreading in the South Friday, they weren’t enough to offset the decline of heating load in more northerly climes.

The cash market was approximately evenly divided between rising and falling points Thursday, with most of the newfound firmness following Wednesday’s drops at nearly all locations based on moderate prior-day screen support and residual cold in sections of the West. The overall weather outlook was bearish as temperatures in most areas are forecast to be above seasonal levels Friday.

An abundance of heating load in northern market areas sustained a continuation of rising prices Thursday — again at nearly all points. The overall firmness was abetted by the 10.7-cent increase in January futures a day earlier.

The cold snap that is developing across much of the eastern U.S. had only limited ability to keep price firmness going Wednesday. Most points fell in deference to forecasts that the eastern cold may be less severe than previously expected and not last much longer than next week (see futures story). A plethora of excess supply issues in the West also contributed to price drops on the day.

Monday’s 37.4-cent advance by October futures may have looked impressive, but it proved to be largely ineffective in sustaining cash market firmness. Mixed pricing Tuesday that stayed close to flat in many instances but leaned mostly to the downside dominated in non-Rockies markets. Meanwhile, the Rockies were beginning to recover from Monday’s price massacre with fairly substantial increases, but still were averaging less than a dollar.

The cash market saw mixed pricing for the third straight day Friday. Call it a tie.

Some cracks formed Thursday in the wall of firmness that the cash market had established the day before, but for the most part severe cold blanketing Canada and nearly all of the Lower 48 states kept a large majority of points rising. A 20-cents-plus screen gain on Wednesday added a bit of extra support to Thursday’s heating load price strength.