Swing

Explaining its wild swing from a $108 million ($0.37/share) gain in continuing operations during the third quarter 2002 to a $791 million ($2.69/share) loss during the third quarter of 2003, Reliant Resources Inc. blamed the difference on its previously announced goodwill impairment and settlement with FERC.

Trading for the last week of the August swing market and for September bidweek got off to quiet starts Monday. Mild bullishness reigned in next-day numbers at most points, with quotes ranging from flat to just over a nickel higher. Tiny dips were recorded at a few western points.

Wednesday’s swing market was almost a mirror image of the previous day. This time single-digit declines dominated the price table instead of the increases by largely similar amounts recorded on Tuesday. One trader said the mild softness on Wednesday is what he actually had expected for both days.

The downhill slope for swing prices got a bit steeper Wednesday. Most points recorded losses between 10 and 20 cents, although a few in the San Juan/Rockies market saw smaller declines as high temperatures continued to hit the century mark in much of the interior West.

Prices continued to fall Wednesday as the swing market remained in a non-surprising bearish mood leading up to the Independence Day weekend. Growing cooling demand in the South, Midwest and parts of the West was insufficient to overcome the price-depressant effects of a second straight day of futures decline, a load drop-off that was already being felt ahead of the holiday, and anticipation of a storage injection report Thursday morning that could again exceed 100 Bcf.

Traders took care of swing business through the end of May Thursday, with moderate gains of up to about 15 cents (most in single digits) dominating over several scattered points that ranged from flat to down a little more than a dime. Although cooling load is growing only at a snail’s pace in the South, sources said screen strength Wednesday in the June contract’s expiry and Thursday in the July contract’s prompt-month debut was enough to drive the mild burst of bullishness.

Moderate softness continued to dominate most of the April swing market on its penultimate day of trading Monday. Cold fronts expected in the Mid-Atlantic, Northeast and Midwest, along with thunderstorms and mountain snows in the Northwest, failed to provide the support needed to avert further price falls at most points.

The 2003 swing market opened Tuesday about as most traders had expected — with price softness. Generally the declines were fairly moderate at around a dime or less, although Northern California, Pacific Northwest and Western Canada points stretched their losses to 15-25 cents or so. Northeast citygates provided a rare note of firmness in anticipation of wintry weather remaining in upper New England and spreading to the rest of the region before the weekend.

Major influences converged to push swing prices lower by about a nickel to just over 20 cents at nearly all points Wednesday: the screen followed up Tuesday afternoon’s decline with even greater expiration-day weakness, and mild late-summer weather virtually everywhere outside the southern edge of the U.S. could no longer be ignored as it had been earlier in the week.