After dipping below $3.700 for a second straight day, natural gas futures showed a bit of a backbone Tuesday afternoon as the November contract rebounded a bit to close at $3.743, up 1.6 cents from Monday’s finish.

All in all it was a pretty quiet trading session as the prompt-month contract moved less than a dime between $3.691 and $3.778. While some market watchers expect the year’s low of $3.610 from Aug. 27 to be penetrated in the near term, others believe it will stand as support.

“The market is trying to wiggle its way down to test the low for the year at $3.610, but I think that price level will hold,” said Tom Saal, a broker with Hencorp Futures LC. “We’ll have to see what happens from here.”

Saal added that the 2010 Atlantic hurricane season is losing its ability to scare this market with each passing day. “Make no mistake, the hurricane season is winding down. I can’t recall too many hurricanes past this point in history,” he told NGI. “Most of them this time of year are going to develop in the Caribbean and the Gulf. The ones that develop out in the Atlantic and have time to strengthen and organize — their time is likely over this year.

“From here we have to set our sights on the winter. If we get some early chill, the resulting heating demand could spark prices a bit higher, but we’ll just have to see what Mother Nature has in store for us.”

Some top traders say they feel it is now time to bail on any short positions. Jim Ritterbusch of Ritterbusch and Associates said “much bad news has already been discounted into the pricing structure at current levels in the $3.70-3.75 zone. As a result, we are suggesting accepting profits out of any existing short positions.”

According to Ritterbusch, institutional traders are leaning heavily toward the short side of the market, and “a significant storm event even at this late stage of the hurricane season could easily translate to a quick price spike of as much as 7-8%. Looking out across the balance of this week, we will anticipate some price consolidation during the next couple of days followed by a price rebound on Thursday since we expect a bullish surprise out of the weekly EIA [Energy Information Administration] storage numbers.”

The National Hurricane Center was tracking a “well defined” low-pressure system centered about 140 miles north of San Juan, Puerto Rico. As of Tuesday afternoon, the government forecasting agency said it had a 80% chance of strengthening into a tropical cyclone over the next 48 hours.

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