Influences

Both the cash and futures markets appeared to respond to influences in seemingly illogical ways Thursday. Despite strong prior-day screen support and spreading cold temperatures in northern market areas, cash prices fell at most points. And for the second Thursday in a row, prompt-month futures shrugged off an undeniably bearish storage report to post a strong gain.

Conflicting influences led to mixed prices Friday that were mostly higher in the East and mostly lower in the West. The negative factors of a prior-day drop of nearly half a dollar in February futures, moderate Saturday-Sunday weather in much of the East and the extra loss of industrial load over a holiday weekend were offset to a great extent by forecasts of severe cold in many areas starting early this week and renewed Nymex support Friday.

Beset on all sides by negative influences — weather, futures and storage — it was little wonder that prices continued to fall at most points Tuesday. Thanks to the popularity of year-end vacations between Christmas and New Year’s Day, trading activity was light.

The cash market recorded double-digit declines across the board Friday as the list of negative influences already in effect — moderate to cool weather in nearly every area, prior-day screen softness, splitting-at-the-seams storage inventories and the long-standing absence of a tropical storm in the Gulf of Mexico — was supplemented by the big reduction of industrial load that affects trading for a weekend.

Prices softened averted across the board in Thursday’s cash market. Negative influences were largely unchanged: widespread moderate weather, futures weakness, nearly full storage and the lack of a hurricane threat to offshore production with the end of the peak period (August-September) in Atlantic hurricane seasons rapidly approaching.

Tuesday’s late expiration-day spike of September futures had limited success in rallying the cash market Thursday. It struggled against the negative influences of generally moderate late-August weather throughout the northern U.S. and Canada, the lack of any new tropical storm activity and the prospects that Tropical Depression Ernesto will be dampening potential power generation load along the East Coast.

This week’s modest rise in cooling load was unable to counter the negative influences of a prior-day screen drop of 16 cents and continuing warnings of potential severe price weakness down the road due to rapidly dwindling storage injection capacity. The result was cash price declines across the board Tuesday.

Was it a case of “you can’t keep a good market down?” Following two days of mostly falling prices, which reflected the general bearishness of market influences, cash quotes for the weekend rallied at a majority of points Friday.

Bearish weather fundamentals and a weaker prior-day screen be damned! The cash market shrugged off its negative influences and posted gains at nearly all points Thursday. A couple of instances of flatness and an intra-Alberta decline were the exceptions to overall price firmness.