Most of the overall swing market was mildly higher Tuesday, withwestern-especially Rockies-points tending to exhibit the most pricestrength with gains of up to a dime. A few PG&E citygate quotessurpassed $3, marking the first time that area has been hit (inU.S. dollars) since Transco Zone 6-NYC topped out at $3.02 forSept. 15 flows.

Noting that Gulf Coast numbers were running higher as tradingproceeded, one trader considered it a “convergence attempt” whilethe screen was still around $2.63. But true convergence usuallyhappens at the same time (that is, screen and cash moving towardeach other simultaneously), he said, “but this time cash movedhigher well before the screen moved lower.”

The West derived much of its extra firmness from the double pushof significant heat in California and east-of-California marketsalong with near-winter conditions in parts of the Rockies. (It was”blizzard-like” in Denver Tuesday morning, a source said, but thesnow was very wet so it wasn’t sticking.) In addition, a couple oftraders confirmed that nuclear outages in the region are growing,with one noting that Palo Verde’s No. 1 unit was already startingto ramp down for a maintenance period starting Oct. 1.

Calling the day’s bidweek action “touchy feely,” a Gulf Coastaggregator agree with other traders that basis was getting softer.He saw a lot of index-minus deals getting done after the Nymexclose. “Things are generally weaker than I expected, but thenagain, what the heck? It’s a shoulder month.”

PG&E citygates for October started in the mid to high $2.80sTuesday but were down to the low $2.80s in the afternoon, largelyin sympathy with the screen’s decline, a marketer said. He wasdoing deals for $2.53-54 at Malin and the low $2.40s for Kingsgateand Stanfield. Similarly, a Midcontinent producer said PanhandleEastern was around $2.49 early on but down to $2.43 in theafternoon.

For the second straight month, utility buyers have anopportunity to really slam swing prices in October’s first weekend,a Gulf Coast marketer said. They were able to push Labor Dayweekend numbers 45 cents below first-of-month indexes, he said,”and this time they will try to do the same.” Because Oct. 1 fallson a Friday, the marketer explained, utilities can shrink their1st-4th swing nominations to zero and use term gas earmarked forstorage to satisfy their peaking demand. They then will have theentire month to make up any storage injection shortfalls, hereasoned.

Another trader had a somewhat similar outlook, saying, “I ampredicting a Day 1 bloodbath.” He had the feeling that many peopleare long at the Chicago citygate and in other markets and have “abunch of dirty hedges” in place.

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