Trends

The February aftermarket got launched Monday on a quiet note and with losses outweighing gains. Weather trends were toward moderation in several regions, although parts of the Southeast were still recovering from a weekend ice storm that had left thousands without power.

End-of-January prices reacted to moderating weather trends (either already under way or impending), Thursday’s screen loss of a dime, and lower weekend industrial load by dropping across the board Friday. The Northeast again was far out in front in leading the charge downward with multi-dollar plunges that had citygates returning to something more closely resembling “normal” levels.

With warming trends developing, several pipelines either had already canceled holiday restrictions that had been in effect over the long holiday weekend due to cold weather or were in the process of doing so. However, a few constraints were still in place Monday. Wellhead freeze-offs were reported in a couple of areas but did not affect deliveries.

The power industry will undergo a “very significant” restructuring “that will yield enormous growth opportunities for us as a company,” Mark Jacobs, CFO at Reliant Energy, told an audience of financial professionals last Tuesday at the Banc of America Energy and Power Conference. “I think those growth opportunities may come more quickly than we’re all expecting,” Jacobs said.

Midweek cooling trends apparently carried more price boosting punch than some traders had expected. Nearly all points were between flat and up nearly half a dollar Wednesday (however, only one point — El Paso San Juan-Bondad — was at the high end; gains elsewhere were limited to less than a quarter).

Moderate softening continued to reign in the cash market Wednesday as slow warming trends fail to prompt enough power generation load to turn prices around. A few Northeast citygates were essentially flat with losses of only a penny, while most other points recorded generally small drops ranging from 2-3 cents to a little more than a dime.

Post-weekend prices bowed to weaker weather fundamentals in recording mostly moderate losses, from a mere couple of pennies to a little more than 15 cents Monday (a couple of flat to slightly higher points managed to creep into the overall mix). A solid majority of declines were in single digits.

Regional variations in upward price trends tended to even out a bit Tuesday. With scattered exceptions, nearly all points were united in seeing gains ranging from a little less than 15 cents to about 35 cents; however, the lion’s share of increases were clustered around the 20-25 cents range. The primary skewing came in most of the smaller gains being recorded in the West.

It was growing clear that despite some recent moderating weather trends, winter may have loosened its grasp a bit over the northern half of the U.S. and Canada but certainly hasn’t let go yet. Thus a moderate rally in cash prices continued Wednesday.