After suffering though a week’s worth of daily advances, bears finally got their chance Monday as extremely mild weather forecasts turned last week’s buyers of natural gas futures into sellers. When a quick uptick at the opening bell failed to surpass Friday’s $5.295 high, sell orders flooded into the trading pit. It took just an hour for the September contract to drop 25 cents Monday morning, nullifying about two-thirds of last week’s advance. It closed for the session at $5.083, down 19.7 cents on the day.

Traders agreed that Monday’s selling was overdue following last week’s string of gains. Usually, that softness would occur ahead of the weekend, but it is hurricane season and traders are reluctant to hold shorts over the weekend. The overarching fear is that a storm will develop over the weekend that will goose prices dramatically higher when the market reopens for Access trading Sunday evening or for regular trading Monday morning.

However, that knife can cut both ways, and this fact was perfectly demonstrated when prices dropped Monday morning on the news that tropical depression No. 9 had been downgraded to a tropical wave late last Friday. As of press time Monday, the National Hurricane Center was tracking three tropical systems in the Atlantic Ocean and Caribbean Sea. However, none of them pose an immediate threat to producing assets in the Gulf of Mexico.

The tropical storm situation was only half of the weather equation. Also of bearish influence Monday was the latest round of intermediate forecasts, which call for continued mild weather for the beginning of September. According to the latest six- to 10-day forecast released Monday by the National Weather Service, below-normal temperatures are forecast for a large, roughly triangular-shaped swath from Maine to Idaho to North Texas. The only areas of above-normal temperatures on the weather map are found in South Texas, South Florida and coastal California.

It will take time for the data crunchers to know for sure, but it looks as if this summer will go down as one of the most mild in recent memory, at least for those east of the Mississippi River. For many market watchers, the cool temperatures could not have come at a better time for a market that began the storage injection season woefully behind on inventory. Since plummeting down to 623 Bcf in April, storage levels have been rising at rate of 91 Bcf/week. And while many market observers find some comfort knowing that there will be roughly 3,000 Bcf in storage by November, they are not ruling out a supply crunch at some point this winter.

According to the Farmers’ Almanac, which hits bookstands Tuesday, there will be little reprieve for New England this winter. Specifically, the almanac calls for winter storms for the eastern half of the country, with snow into late April for the New England states. “The big story in the Northeast is that February looks like it’s going to be a never-ending series of storms that will be reminiscent of last year,” managing editor Sandi Duncan told the Associated Press Sunday.

Despite Monday’s price weakness, technicals continue to call for higher prices in the longer term. Cynthia Kase of New Mexico Kase and Company said the odds are at 75% that $5.00 will hold and propel prices to the $5.55 level. “The $5.75 level currently has a just under a 50/50 chance of being met,” she wrote in a note to clients Monday.

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