With Hurricane Emily looking like less and less of a threat for long-term Gulf of Mexico shut-ins, August natural gas futures traded within a thin 12-cent range Tuesday before settling at $7.586, down 6.6 cents on the day. While logging its second consecutive down session, the prompt month was unable to get below $7.50, which is acting as a support level.

“I think everyone is figuring Emily is not going to be a factor,” said Brad Florer, a broker with ICAP Energy. “At this point, I think it has moved too far west and the feeling is that producing areas are not going to be affected.”

The broker noted that natural gas futures ran up last week due to the storm to contract highs in Access trading, but have now come back off. “However, if you look at the grand scheme of things, this dip really isn’t that spectacular. I don’t think there is any real selling going on out there,” Florer said. “I just think any time we get a run-up, the longs are quick to get out because they are still not comfortable with these price levels at this time of year with the amount of gas still in storage.

“Support really held today around the $7.50 area, which is about halfway back on the recent move. Below $7.50, there’s a gap to $7.25 and $7.20. That would be the next big level. Until you get through that gap, I think all we have right now is noise.”

Florer said bears are looking at those numbers as a possible pullback target, while the bulls are thinking they really need to defend that level and not let it get through there. “I think there is a lot of room right now to move around in the $7 handle without really affecting the general feeling in the market, which I think overall is bullish right now,” he said.

Hot temperatures may be the bulls’ best hope. According to AccuWeather, the heat wave in the Southwest is breaking record high temperatures across the region. In Las Vegas, NV a new record high was set Monday when the mercury topped out at 116 degrees, and temperatures through Tuesday were expected to near the same levels. The forecaster noted that Death Valley, CA is leading the heat push with afternoon temperatures in the upper 120s, which is getting close to the national record of 134 degrees set in Death Valley on July 10th, 1913.

And New York and New England power system operators reported record-breaking electric sendouts Tuesday due to a heat wave.

Beyond Tuesday, the National Weather Service (NWS) is forecasting robust levels of cooling degree days (CDD) in the more populous areas of the industrialized Midwest and Mid-Atlantic. For the week ending July 23, the states of Ohio, Indiana, Michigan, Illinois, and Wisconsin are expected to see 84 CDD, or 26 above normal. The heavily industrialized states of New York, New Jersey and Pennsylvania are forecast to swelter through 82 CDD, or 23 more than normal.

Aggregations of CDD are well ahead of schedule. For the season, the Mid-Atlantic has so far tallied 347 CDD, or 87 more than normal, and the industrialized Midwest states above have suffered through 398 CDD, or 78 higher than seasonal norms. For the season, the entire U.S. is currently 9% warmer than normal, according to CDD tallies by the NWS.

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.