Trends

Prices managed to rise at nearly all points Thursday, boosted by cooling trends in northern market areas, continuing cold in mountainous parts of the West and ongoing momentum from three preceding days of futures gains this week. But Thursday’s 36.5-cent screen reversal (in response to a moderately bearish 5 Bcf weekly storage injection), combined with the weekend loss of industrial load and the fact that little if any especially severe cold was in the offing, made it likely that softness would prevail in the cash market Friday.

Last week’s market ended quietly with anticipated declines at most points Friday as warming trends were expected to be in place by the end of the weekend in many of the areas that had been experiencing cold weather. However, flat to moderately higher numbers in several scattered instances averted a clean sweep of softening.

As expected, Monday’s 36-cent fall in November futures and moderating weather trends in some areas resulted in softer cash prices at most points Tuesday. A few scattered points that were flat to up a little more than a dime ran contrary to the overall market direction.

A 31.6-cent near-month futures dive on Wednesday, continuing futures weakness Thursday and approaching rewarming trends in some of the areas affected by a cold wave brought this week’s three-day cash market rally to an end on Thursday.

The boost that prices got from unexpected cold weather in the first two days of the week came to an end in the East Wednesday as moderating trends were due to be under way. However, quotes continued to increase at most western points as winter storms rage through the region.

Prices were up across the board Thursday, with a solid majority of gains in double digits. Hotter weather trends in the Midwest and South were due to push highs into the 80s and 90s across most of both regions Friday, causing them to join the already sizzling West as sources of rising power generation load.

While Tropical Storm Arlene failed to develop into a significant storm such as Hurricane Ivan in 2004, a review of hurricane trends show that there is more than a one in three chance of large hurricane catastrophe-losses in the United States in the current season, according to EQECAT Inc., an extreme risk modeling firm.

Although trends toward milder weather would be minuscule over the weekend, traders used the likelihood that they would become more pronounced in the coming week to push cash prices lower at nearly all points Friday. As usual, the typical weekend drop in industrial load was a minor factor in the softness.

Traders were in agreement that, with moderating weather trends in sight, there was little reason for prices to rebound across the board Thursday other than Wednesday’s action in Nymex’s crude oil trading pit, where crude for April delivery set intraday and daily settlement records.