Softness

Several traders had expected that the cash market had one more day of firmness left in it before softening for the weekend, but Wednesday’s screen gain of nearly a dime and continued cooling demand proved insufficient to avert price losses across the board Thursday. And despite a bullish storage report that prompted a screen spike Thursday, sources continued to look for further declines Friday.

Flat to slightly lower quotes were sprinkled here and there, but most of the cash market was in rebound mode Monday. The return of industrial load and Friday’s screen uptick of 4.1 cents provided much of the support, as weather fundamentals waxed and waned in different areas.

The market experienced an expected rebound Monday from major weekend softness, but not counting substantial western increases, the rally in the East was “rather anemic” in comparison with Friday’s declines, one source said. The anticipated hotter weather either failed to materialize or was considerably less than expected.

Moderate softness at some points in the Midwest and West was mixed into an overall market Wednesday that was flat to a little more than a dime higher. Rainstorms in much of the East were helping to dampen hotter weather that had been increasing power generation load earlier in the week, and cooler temperatures were moving southward into the Rockies, relieving some of the cooling load in that region as well.

The heat that spurred Tuesday’s price gains obviously was sufficient for only one day of bullishness. With some cooling trends approaching, and pressure from five straight preceding days of screen weakness, prices fell by double digits at all points Wednesday. Losses ranged from 15 cents to nearly 50 cents, and most points retreated further than they had advanced in Tuesday’s mini-rally.

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.

The western heat and Midwest/Northwest cold that had combined with energy futures strength to push prices higher earlier in the week were unable to sustain further increases Wednesday. Moderating weather trends and an initially softer screen caused swing quotes to range from flat to a little more than 15 cents lower; most dips were mild at less than a dime.

The swing market achieved a fairly substantial recovery Monday from weekend softness. Advances ranged from about a nickel at a couple of South Texas points to more than 30 cents in the Southwest basins. Most were in double digits between a dime and a quarter.

Maybe all it took was the beginning of spring to induce the first substantial market softness in more than a week. Lower industrial load over a weekend, a bit of moderation from cold weather in the Midwest and Northeast, and energy futures weakness the day before were the chief causes of across-the-board declines in spot prices Friday.