Fundamentals

As sources had expected, the cash market succumbed to weak weather fundamentals and dwindling energy futures support Tuesday by staging a major retreat. Virtually all points saw double-digit declines ranging from about 15 cents to half a dollar or so

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.

Gradually strengthening hot weather fundamentals solidified the post-weekend price rally Tuesday, putting all points into the rising column and creating larger gains than the day before in the Gulf Coast, California and Rockies. Upticks ranged from about a nickel to 20 cents.

Although hot weather fundamentals continued to get a little stronger Friday, they were unable to overcome the negative market influences of the usual slump in industrial load over a weekend combined with the previous day’s bearish storage report and large screen decline.

After refusing to bow to weak weather fundamentals in the previous two days, prices practically did a curtsy for weather Friday with declines ranging from about a dime to a quarter. The softness was fairly homogenous across geographic areas, although Northeast citygates and several western points tended to garner most of the drops of 20 cents or more.

In a move that surprised some traders because of continuing weak fundamentals, most of the cash market ranged from flat to as much as about a dime higher Wednesday. A few scattered points saw mild softening limited to a nickel or less.

Instead of “following the screen” strength of the previous few days, cash prices found weak fundamentals to be a more compelling influence Friday. Quotes dropped across the board by anywhere from a little more than a nickel to more than 40 cents. The largest declines tended to cluster in the West and Northeast, while most of the smallest ones were in the Gulf Coast.

Wednesday’s screen spike obviously trumped somewhat bland weather fundamentals in pushing cash prices strongly higher Thursday. However, a combination of reversals in Nymex’s energy futures complex Thursday and the typical drop in weekend industrial load is a sure bet to spur market softness Friday, several sources agreed.

Weakening weather fundamentals, the industrial load drop typical of a weekend and a mildly bearish storage report the day before combined to keep prices on the slide Friday at all points. Declines ranged from about a nickel to just over 20 cents.