In a classic example of a market that bends, but has yet to break, natural gas futures rebounded ahead of the weekend after notching a new low for the week early in Friday’s session. With that the September contract concluded a tumultuous week of trading in which three up days were not enough to overcome two days of significant losses. The contract finished at $5.533, up 9.1 cents for the day, but down 5.5 cents for the week.

After spending most of Friday’s session near its lows for the week, the September contract rebounded late Friday on a combination of supportive crude prices and precautionary buying on hurricane fears. Venezuela joined Russia and Iraq in the crude oil headlines Friday as the country braces for a presidential recall referendum that sources fear may spawn more civil insurrection and crude oil production curtailments.

However, Tim Evans of IFR Pegasus in New York is quick to throw water on that scenario. “The oil fields and export terminal are at some remove from population centers. A Chavez win and protests is only one possible outcome, and PDVSA was purged of politically active employees following the December 2002 strike,” he wrote in a note to customers Friday. September crude finished at $46.58 Friday, up $1.08 for the day and just off the commodity’s new, all-time high at $46.65.

But crude was not the only attention-grabber Friday. Also influencing the price of natural gas was a new flurry of tropical activity out in the Atlantic Ocean. As of press time Friday, the National Hurricane Center had initiated coverage of Tropical Depressions Four and Five. Though both systems were still thousands of miles away from gas infrastructure in the Gulf of Mexico, traders were taking no chances and were seen bidding the market higher in a bit of pre-weekend hurricane hype.

Aside from supportive crude oil futures and hurricane concerns, natural gas bulls have very little on which to hang their hat, traders agree. Record low temperatures (for the date) in Minnesota and jacket weather in Chicago might usually put the buyers on the offensive, but that is not the case in the month of August, when the lost cooling demand in those areas is actually a bearish phenomenon, a Washington DC-based broker noted. “Aside from the storms, this weather pattern is very bearish…. Add to that the fact that we have largely decoupled from crude, and you have a recipe for lower prices.”

Technicals are also bearish, she continued. “On both the daily and weekly perpetual charts you have series of lower lows and lower highs… Immediate support is seen at $5.42, and a break there could lead to a test of $5.29 or ultimately back down to the $5.05-06 area.”

Evans agrees with her price-negative inclination and points to the $4.39 low notched last September of an example of what the gas market can do when faced with mild weather and a burgeoning level of gas in underground storage. His early prediction for this Thursday’s storage report is for a 65-75 Bcf net refill. If realized, a number of that magnitude would fall just below the year ago analog of 77 Bcf, but comfortably above the five-year average build of 59 Bcf.

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