To no one’s surprise, swing prices for the last day of June kept falling Tuesday. The usual suspects were at work: overall mild weather with daily highs unable to struggle higher than the 80s virtually everywhere outside the desert Southwest and Florida, and energy futures weakness the day before that remained in force Tuesday.

New losses ranged from a nickel to a little more than 20 cents. Declines of varying sizes were mixed across geographic areas, although many of the larger ones were found in the West, which was subject to a high-linepack OFO by PG&E.

Expectations of a cash market rally between now and next week are hard to find, one source said. Although Northeast and Midwest temperatures are slowly edging higher, no substantive warm-ups are in the near-term forecasts, he said, and unless the Iraq/Middle East situation turns drastically south again, energy futures are likely to keep falling with the lessening of supply concerns among crude oil traders.

A Gulf Coast producer reported seeing daily spreads between the production area and Northeast loosen up by a couple of cents since late last week. Texas Eastern-East Louisiana to M-3 got super-tight at one point, he said, noting that just before the weekend he was only clearing the variable cost margin by a half cent “when typically you can get a few cents” cushion. Transco has also seen some very tight field-market spreads recently, the producer added.

Enjoy this generally mild weather while you can, cautions Weather 2000, because it’s the “calm before the storm” of the main summer months. “For all the heat spikes out West, mugginess out East, and CDD [cooling degree day] surpluses everywhere outside the Midcontinent over the past 60 days, it all remains influentially small potatoes to the upcoming 60 days,” the consulting firm said. “We’re preparing for an above normal July-August” in temperatures.

An industrial end-user was glad to see indexes coming down in July. He still considers prices too high, but said his company’s energy budget for the year is “hanging in there.” First-of-month numbers will be weaker for the first time since March, he observed. The end-user shunned doing fixed-price deals for July, saying he felt that index-based deals would be weak, and found that to be a fact. His Chicago citygates got as low as minus 4 cents via NGPL and minus 1 cent via Alliance, he said.

Moderate weather and falling energy futures kept prices getting weaker as bidweek proceeded, and that was still in effect Tuesday, one trader said. “I didn’t really do anything new today,” but he could tell that July prices fell by up to another dime. Once again the screen (including oil products) led the way. This was a bidweek when waiting until the late stages was a good deal for buyers, the trader said. However, he thought most July business had gotten done before the weekend. He perceived bidweek activity as tending to fall off in summer, saying, “At least that’s what I’ve seen in the last two months.”

Most buyers consciously choose whether to buy baseload gas or take their chances on the aftermarket. For an East Coast utility buyer, there was no option. A generating plant that had been down for a couple of months “is trying to start up now,” she said Tuesday, but at that point she had no way of knowing whether to baseload any gas for it, and thus will wait out the market. She was pretty sure she would be buying swing gas again by mid-July.

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