Despite the development of Tropical Storm Bill in the Gulf of Mexico over the weekend, natural gas futures turned only modestly higher Monday as bulls appear to be still reeling from last week’s very steep price downdraft. The August contract closed at $5.411, up 4.9 cents for the session and in the middle of the contract’s 13-cent trading range Monday. At 45,356, extremely light estimated volume was evidence of the lack of consensus surrounding the day’s trading activity.

However, upon learning that a tropical storm had formed in the Gulf of Mexico over the weekend, traders showed great reserve in not bidding the market dramatically higher. “Traders have decided there really wasn’t enough time before the storm hits for the full cycle of buying the forecast and selling the news, opting for more of a wait-and-see strategy instead,” wrote Tim Evans of IFR Pegasus in a note to customers Monday.

A quick survey of Gulf Coast producers and pipelines turned up little or no supply disruptions (see related story this issue). That, coupled with the movement of the storm over land last night should greatly diminish the spotlight on TS Bill Tuesday. Traders will also want to start concerning themselves with the weekly storage report. Evans looks for a 100-110 Bcf figure to outpace the 68 Bcf refill from last year as well as the 76 Bcf five-year average.

And while fundamentals are bearish, technicals are mixed. On the upside, chartists anticipate resistance at $5.55, with good odds $5.70 should hold. On the downside, support first exists at $5.24. A break lower would lead to a test of $5.15, sources said.

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