Although most of the market continued to soften Wednesday in trading for the last day of March, there were a couple of hints of latent strength in nearly all of the declines being smaller than the day before and quite a few points, primarily in the Northeast and Rockies but also in a few other scattered locations, were flat to slightly higher.
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Cash prices continued to soften at most points in Friday’s launch of the September aftermarket even as the pace of Gulf of Mexico (GOM) shut-ins and evacuations quickened. The previous day’s 55.8-cent plunge by futures, generally moderate weather forecasts outside the Southwest and much of the South, the holiday loss of industrial load and a highly bearish storage report a day earlier apparently mattered more to cash traders than the accelerating offshore production losses.
ConocoPhillips on Wednesday was among the first in line among U.S.-based producers to issue a 4Q2006 earnings report, underwhelming investors on the news that its profit slid 13% from a year ago. However, the Houston-based company probably won’t be the last to report tempered profits during a quarter with warmer-than-normal temperatures, soaring service costs and falling energy prices.
“Why is May masquerading as January?” A source’s somewhat tongue-in-cheek rhetorical question succinctly described why nearly all of the market continued to soften substantially Monday and why a significant rally seems unlikely until the latter half of January — if then.
Sources cited increasing heat levels, particularly in the Midwest and Northeast, as the primary reason for fairly sizeable price rallies Tuesday at a majority of points. Only California, which was under a double-OFO whammy, saw moderate softening, although its depressant effect on western markets in general resulted in flat quotes for San Juan Basin and a few Rockies points.
With prior-day futures support having disappeared and mild-weather fundamentals coming more into play, nearly all points ranged from flat to down a little more than a dime Wednesday. A small gain by El Paso-Permian was a negligible exception to the overall trend.
Winter hasn’t exited the seasonal weather stage quite yet, but looks like it might be getting ready for its final curtain call. Most of the coldest remaining temperatures are in northern New England and ranging from the Upper Plains through the Rockies.
Most of the cash market was softer as expected Thursday, but forecasts of warm to hot weather in much of the U.S. outside the West Coast over the Fourth of July weekend and late run-ups following release of the storage report allowed a few scattered points to record flat to mildly higher numbers. The losses tended to range from just under a nickel to about 35 cents, with a majority at 15 cents or less.