Spike

Largely due to a prior-day futures spike following a much-larger-than-expected storage withdrawal report, but also because of very cold weather continuing to dominate North America forecasts, cash prices were up at all points Friday.

Prices continued to spike in the Northeast Wednesday, with a few other regional citygates joining Transco Zone 6-New York in jumps of about a dollar or more and Texas Eastern M-3 skyrocketing by more than $2. However, this week’s bullishness showed signs of stalling, with Gulf Coast numbers generally only a few cents both up and down from flat and markets in the Midcontinent/Midwest and West mostly on the moderately softer side.

Prices continued to rise across the board Wednesday, spurred largely by the previous day’s spike of 32.6 cents by November futures for the first daily close above $5 since January. However, there was some indication that the cash market is beginning — at least temporarily — to acknowledge that weather-based fundamentals have been getting weaker after virtually all gains shrank Wednesday and not all of them were in double digits as was the case Tuesday.

Getting a fresh burst of “energy” from the previous day’s 44-cent futures spike, cash prices rose across the board Thursday. In most cases the gains were larger than on Wednesday, despite weather load remaining light for the most part outside some 100-degree forecasts in the desert Southwest.

Based almost entirely on the previous day’s futures spike of 42.7 cents — certainly not on a continuation of meek weather-based demand — prices rebounded at nearly all points Friday by double-digit amounts.

As a Gulf Coast trader had predicted Thursday, the 22.5-cent spike by futures that day was able to generate modest firmness in most of the cash market Friday. The screen boost was abetted by increases in cooling load in Texas and the Midcontinent, while the weekend decline of industrial demand had minimal impact.

Increases in heating load, with more on the way, combined with the previous day’s 38.1-cent spike by December futures to keep cash prices on the rise at most points Wednesday. Expectations by some analysts of a rather small storage injection report Thursday may have added to the overall bullish mood.

Focusing on weather and global warming trends and ignoring “black swans” — incidents that spike well above or below established trends — could blind investors and the energy industry to opportunities, according to Bethlehem, PA-based long-range forecaster Weather Trends International (WTI).

Focusing on weather and global warming trends and ignoring “black swans” — incidents that spike well above or below established trends — could blind investors and the energy industry to opportunities, according to Bethlehem, PA-based long-range forecaster Weather Trends International (WTI).