Signals

Thursday’s trading confirmed the signs from Wednesday that therecent bullishness in swing prices had reached a peak. Although afew points were flat to 2-3 cents higher Thursday, the majorityfell by several cents, with the greatest weakness occurring in theMidcontinent/Midwest and Southwest markets. Cash anticipated afutures downswing and beat the screen to the punch by starting tosoften earlier, a Midcontinent marketer said, although Nymextraders eventually wound up the day with a small gain.

Convergence is going to continue in the energy industry becauseit is what customers and financial markets want; the market signalsare unmistakable, according to an industry representative and aninvestment funds manager.

After a spirited rally Tuesday that propelled the Augustcontract to its highest level since July 15, the market took abreather Wednesday as traders elected to wait on the sidelinesahead of fresh fundamental news. The prompt month finished down 0.6cents at $2.394 in choppy, range-bound trading.

After almost 18 months of detailed proceedings and negativelegislative signals, California regulators have pulled backsubstantially from original proposals to unbundle the state’snatural gas industry along the lines of the state’s electricderegulation.

After almost 18 months of detailed proceedings and negativelegislative signals, California regulators have pulled backsubstantially from original proposals to unbundle the state’snatural gas industry along the lines of its electric deregulation.

The nation’s largest gas distributor, Southern California Gas,last week signaled a possible future change in the way itscustomers access intrastate transmission during oral arguments atthe CPUC on future changes in California’s gas industry. Inaddition, for the first time, a number of the 19 major participantsin the state’s gas restructuring proceeding suggested a settlementprocess might be adopted to resolve some controversial issues.

The nation’s largest gas distributor, Southern California Gas,earlier this week signaled a possible future change in the way itscustomers access intrastate transmission during oral arguments atthe CPUC on future changes in California’s gas industry. Inaddition, for the first time, a number of the 19 major participantsin the state’s gas restructuring proceeding suggested a settlementprocess might be adopted to resolve some controversial issues.

Unconvinced that the latest uptick in domestic oil pricessignals a turnaround, domestic producers last week descended on theWhite House and Capitol Hill to make a direct pitch for marginalwell tax credits, exploration and production (E&ampP) incentivesand other economic reforms to boost the ailing oil and gasindustry.

Getting no signals from the futures trading pit, thelate-January cash market saw mild softening Tuesday. With snowyconditions covering the northwestern quadrant of the U.S., Westernpoints again tended to be flat to off no more than a penny or two.However, they were joined in small dips by several Gulf Coast andMidcontinent pipes, and Michigan citygates even managed to eke outmodest gains.