Moderate

Moderate softening continued in the swing market Thursday for the most part, but points here and there were flat or eked out tiny gains. Except for some lingering chill in the Upper Plains, Rockies and Western Canada, temperatures were converging toward pleasant levels appropriate for mid-spring in nearly all other regions (cooler in the Southwest and warmer in the Northeast). However, a cold front was due to move into the Midwest by the weekend.

Although the overall weather picture remains basically moderate, there apparently is just enough chill returning to cause cash prices to level off or rally Wednesday. A majority of points were flat to slightly higher, with gains of more than about a nickel largely limited to the Rockies/Pacific Northwest. California and some Northeast citygates saw small declines.

This week’s price trend, which began with mostly moderate firmness Monday and shifted Tuesday to a mix on either side of flat, continued to the downside Wednesday. With mild weather across the southern tier of states and no more than normal cold conditions elsewhere in the U.S. and Canada, all points were united Wednesday in losses that ranged from just under a nickel to more than 30 cents.

An increased focus on long-life plays by major producers eventually should moderate production declines in Canada, but they will not be enough to fully offset continuing declines, Lehman Brothers said in a report last week. Analysts also warned that recent sales announcements could be a prelude to more divestitures from the maturing Western Canadian Sedimentary Basin (WCSB).

An increased focus on long-life plays by major producers eventually should moderate production declines in Canada, but they will not be enough to fully offset continuing declines, Lehman Brothers said in a report issued Tuesday. Analysts also warned that recent sales announcements could be a prelude to more divestitures from the maturing Western Canadian Sedimentary Basin (WCSB).

Flat to moderately lower Northeast/Appalachian numbers Wednesday ran against the grain of overall firmer spot prices in which gains were mostly small and quotes ranged from flat to more than 30 cents higher. Virtually all of the increases above a dime occurred at Rockies, Pacific Northwest and Northern California points, which are feeling a touch of winter from a Pacific storm.

As presaged in late declines a day earlier, the physical market began to retreat for the most part Thursday from two strong surges earlier in the week. The Northeast cold snap that had helped generate the bullishness of Tuesday and Wednesday was expected to be yielding to milder weather during the weekend.

Former Hurricane Isabel was leaving a messy legacy in the Mid-Atlantic; mostly moderate to cool forecasts dominated the rest of the weather picture; an extra-big storage injection report had its usual day-later impact on the cash market; and of course trading was for the weekend, when industrial load normally slacks off. Small wonder, then, that Thursday’s declines gained downhill momentum and racked up further losses ranging from about a dime to 35 cents Friday.

With a long holiday weekend and increasingly moderate weather looming on the immediate horizon, no one was surprised to see across-the-board declines in double digits Thursday for prices through the end of the month. And despite a surprisingly low storage injection report and the late-afternoon emergence of Tropical Storm Fabian, sources expect softening to continue Friday in trading for the initial September aftermarket.