Resisting the temptation to drop lower in concert with weaker cash prices, natural gas futures rebounded off early session lows Monday as traders bought contracts at levels that, in weeks to come, might prove to be bargains. The October contract finished at $3.399, up 13.4 cents for the session and within striking distance of last week’s $3.445 high. Meanwhile, Henry Hub cash prices for September dropped 14 cents to average $3.24 on the day.

For the first time in several weeks, crude oil, which drifted sideways Monday, was not an influence on natural gas prices. Instead, traders pointed to constructive technical factors and bargain buying as reasons for the rise in natural gas futures. The October contract bounced convincingly off a double bottom low at $3.10 last week.

After a brief letdown Friday on the realization that Tropical Storm Fay would amount to little more than drenching rains for South Texas, the prompt month rallied back Monday. Looking ahead, bulls will likely hone in on last week’s top in early trading Tuesday, traders agreed. However, not all are convinced higher prices are in store immediately for the natural gas market.

Maintaining his bearish stance, Tim Evans of IFR Pegasus points to plentiful supply and decreasing shoulder-month demand as reasons to be short this market. “Stocks remain well above their historical levels, 205 Bcf more than a year ago and 310 Bcf beyond the five-year average. Cooling degree days for last week were right in line with the prior week, suggesting another 65 Bcf in net injections, but we note the Labor Day holiday would have put a further crimp in demand,” he wrote in a note to clients Monday.

Kyle Cooper of Salomon Smith Barney looks for an even larger 75-85 Bcf refill, which if realized would compare bearishly to last week’s build of 65 Bcf. However, Cooper is more inclined to compare this week’s injection to the five-year average of 71 Bcf. “If injections continue at the same pace in regard to the historical regression and temperatures are ‘normal,’ storage levels also rise to over 3,250 Bcf.”

Nymex will hold a staggered opening on Wednesday, Sept. 11, with natural gas, crude, copper and platinum futures and options opening at 11 a.m. EDT. Access trading will be unaffected by the delayed start, ending at 9 a.m. EDT.

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