Coming off last week’s $1.673 drop in August natural gas futures, traders on Monday proved unsure of their next move as both the upside and downside of the front-month position was probed during the regular session. The prompt-month contract bounced between $11.845 and $12.137 before coming to a close at $11.959, up 5.5 cents over Friday’s finish.

Traders have no lack of influential factors as crude futures continue to trade above $145/bbl and the Atlantic Ocean begins to swirl with storm activity. August crude gained a dime Monday to close at $145.18/bbl.

While Tropical Storm Bertha continued to hover just east-northeast of Bermuda and posed no threat to the United States, AccuWeather.com hurricane center forecasters are also closely monitoring a tropical wave located about 1,000 miles east of the southern Windward islands, where satellite imagery shows a counter-clockwise spin near the center of the area of low pressure.

The system that could become Tropical Storm Cristobal is different from Bertha in that it formed further south, which could put the Caribbean and Gulf of Mexico in danger, according to forecasters.

“The system is moving to the west and is expected to continue on this general track over the next few days,” said Brett Anderson, AccuWeather.com senior meteorologist. “This system has formed much farther south than Bertha, and so the Caribbean region will need to monitor the situation closely. The system should strengthen further as it encounters warmer water and a low shear environment closer to the Lesser Antilles.”

After crunching the raw data from last week’s significant price drop, some technical analysts suggest that natural gas prices may not have much further to fall. “Viewed seasonally, natgas typically endures a bull market correction from a spring peak to a summer low. The most shallow and brief such retreat was the 12.7% dip in 1999 from April 29 to July 12. The deepest such retreat was the 51% loss in 2006 from April 19 to Sept. 27,” said Walter Zimmerman of United Energy.

According to Zimmerman’s calculations, if one assumes that the $13.694 reached on July 2 in electronic trading was the “spring” peak, it was the latest such peak ever. “This suggests less time than usual is available for the seasonal retreat. In wave count terms our next two steps down from $11.770 are $11.075 and $10.265 as 0.382 and 50% of $6.838 to $13.694,” he said in a Monday morning note to clients.

Risk managers are looking for a spot for producers to sell. “On a trading basis we will hold current put positions and will monitor the market for a supply driven rally to give us a chance to sell some winter gas. We were hoping Bertha would give us the rally, but it was not the case,” said Mike DeVooght of DEVO Capital, a Colorado trading and risk management firm. DeVooght currently advises trading accounts to hold a spread position consisting of a short October and long January contract established at 70-75 cents. End-users are advised to stand aside, and producers should continue to hold an August-October $11.500 put strip established earlier at 75 cents.

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