Flat

With support from colder weather earlier in the week starting to fade, many points were flat or close to it in a Wednesday market that saw prices move in both directions. Gains that ran as high as about US15 cents (or C25 cents in the case of Westcoast Station 2) were in a slight majority, while losses ranged from a couple of pennies to about a quarter.

A few enigmatic gains and a mostly flat Chicago citygate notwithstanding, prices kept falling at all other points Wednesday in response to pressure from mild weather fundamentals and the screen’s second dollar-plus plunge in three trading days Tuesday.

A few instances of flat to moderately higher pricing showed up in the West, but an overwhelming majority of the cash market continued to probe lower levels Tuesday as traders returned from Christmas holiday. Widespread mild weather and the extension of natural gas futures plunges into their third day Tuesday weighed heavily on cash quotes.

ConocoPhillips expects 2005 oil and natural gas production will be flat when compared with 2004, or about 60,000 boe/d under its initial guidance, but longer term, output should rise 3%, company officials said Wednesday. This year’s shortfall was blamed on lost output under production-sharing agreements with foreign governments, as well as the Gulf Coast hurricanes in the third quarter.

A few flat to a little more than 35 cents lower points notwithstanding, most of the cash market was decidedly bullish Tuesday as colder weather had already arrived in some areas or was on the way in others. The gains were pretty much all weather-driven, sources said, since futures and storage influences tended to remain on the negative side.

There were some exceptions of flat to slightly higher prices Thursday, but a large majority of the cash market was moving lower. Virtually all points are expected to fall Friday under the weight of a hefty storage injection, a major screen plunge Thursday prompted by the storage report, generally moderate weather, and the usual weekend drop in industrial load.

Cash numbers were firmer again Wednesday in most cases, but several points that were flat to nearly 35 cents lower continued to keep the market from uniting in consistent price movement. Some prior-day screen support and the persistence of Gulf Coast supply shortfalls were considered the key reasons behind gains ranging from about a nickel to a dollar.

Flat to lower prices at a few scattered points remained the exceptions in an otherwise bullish market Thursday. This time cash numbers could claim support from a prior-day screen gain of 40.3 cents, along with continuing concern about Hurricane Katrina shut-ins and winter supplies, in offsetting weaker weather-driven demand.

Showing that significant screen weakness on the previous day is not an automatic harbinger of subsequent softness in cash numbers, prices ranged from flat to as much as 65 cents higher at nearly all points Tuesday despite a natural gas futures loss of nearly a quarter on Monday. A few Gulf Coast points softened by as much as a dime in exceptions to the overall market strength.