In sympathy with its petroleum complex brethren, and amid concerns that it is not too late in the season to suffer hurricane-related production loss, natural gas futures shuffled higher Monday, after a disappointing opening trade threatened to take the prompt month to new lows. November finished the session at $2.27, 4.3 cents higher for the day and 13 cents above its Oct. 1 lows.

Traders returned to their offices Monday and immediately refocused their attention on the tropics. The question was clear: Would hurricane Iris make the turn to the north and into the gas-rich Gulf of Mexico? As the day progressed that question was answered in the negative, as the cyclone continued on its path to the west on course to the countries of Belize, Guatemala and Honduras. However in the wake of Iris, another storm had formed, and that prompted traders to think twice about dumping their longs or initiating new shorts.

Packing maximum sustained winds of 50 mph, tropical storm Jerry was located yesterday afternoon about 285 miles South of Puerto Rico and moving to the West/Northwest along the same path that Iris had taken just a few days earlier.

“We do not expect Jerry to make a turn to the north where it would have a chance to impact natural gas rigs in the northern Gulf of Mexico,” said meteorologist Jon Davis of Salomon Smith Barney. “It might have a shot at disrupting Mexican oil production in the Bay of Campeche, but not natural gas in the Gulf.”

The reason, explained Davis, is the existence of strong mid-latitude westerly winds (west to east) that deflect storms trying to make the turn into the Gulf of Mexico. Earlier in the hurricane season — in July and August — the Westerlies are located over the U.S. and Canada. It’s not until late in the season that they drop down to the mid-latitudes, he added.

However, the weather was not the only thing impacting natural gas prices Monday. Also of influence was crude oil and related products, which pressed higher throughout the course of the day. November crude closed 6 cents higher at $22.45, after etching out a morning low of $21.95.

Looking ahead, Jay Levine of Advest Inc. believes the natural gas market can expect more of the same. “The overall trend is still down and based purely on fundamentals, I believe we are still overvalued by 50 cents or more. However, the market is waiting on winter, and in the meantime you can expect to see choppy, range-bound trading. I would look to sell rallies up into the $2.30s and buy good dips into the low $2.20s,” he reasoned.

However some analysts fear that because the market has tested back to the upside, it now possesses the momentum to break to new lows. While admitting that the market is very well supported at current lows from a structural standpoint, Cynthia Kase of New Mexico-based Kase and Co., believes the market could extend 30-50 cents. “Specifically, first support below current lows is found at $2.09, $2.365, and $2.58 for the front three contracts respectively. However, a break of the low has good odds of moving beyond these initial targets to very major targets at $1.87, $2.13, and $2.24,” she said.

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