Natural gas futures put in another losing performance Tuesday, much to the delight of the bears, but the activity was on low volume and traders noted little aggressive selling.

The June contract fell 11.2 cents to $7.801 and July dropped 10.7 cents to $7.984. Traders found little in the way of new developments to impact prices and June natural gas confined itself to a narrow 9-cent trading range. The expiring June crude oil contract retreated $1.30, giving up almost all of Monday's gains to settle at $64.97.

"Natural gas traded primarily along with crude oil, but the market was very quiet," said a New York floor trader. The trader said that there were a few "back month" trades that took place, but "nothing directional."

"Everyone held their cards tight, and even though the market closed on its lows, typically a highly bearish signal, it was a nonevent," the trader said. In spite of the soft finish the market has "very good support at the $7.80 and $7.79 areas, and the market would have to get below $7.61 before anyone would think about a bigger move lower," he said.

Risk managers are using the small moves in the natural gas futures market to enhance client revenues and prepare for price advances. "I was selling September and October put options at $7 and collecting the premiums, said a California broker. He added that he was also buying August and September futures for clients, but protected against market moves lower by buying put spreads below the purchase price of the August and September futures "just for protection." He noted that the idea was to protect end-users against an active hurricane season and sharp budget-busting price advances.

The National Oceanic and Atmospheric Administration's (NOAA) Climate Prediction Center came out with an above-average hurricane forecast for the 2007 Atlantic hurricane season. It forecast 13 to 17 named storms and seven to 10 hurricanes. On average, the Atlantic will see 11 named storms (see related story).

The risk manager suggested that as long as "crude oil is at $65, natural gas will be at $8, and not $4, $5 or $6. On a longer-term basis you can still recommend buying three- and four-year strips on price breaks. I have some as far out as 2011," he said.

Some bulls are a little nervous. Phil Flynn of Alaron earlier in the week recommended buying July natural gas at $8.02 with a stop loss order at $7.95. July futures settled Tuesday at $7.984 and traded as low as $7.980.

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