October natural gas is expected to open 5 cents lower Monday morning at $3.63 as traders assess a soft fundamental outlook and tropical threats diminish. Overnight oil markets plunged.

According to Mike DeVooght of DEVO Capital Management, the market is not likely to break much beyond $4, if it moves higher at all. Nonetheless, from a risk management perspective, he advises clients to protect themselves against weaker prices. “Natural gas settled slightly higher on the week. After trading in a tight range for the past week, a friendly gas storage number was enough to push the market higher on the week.

“Fundamentally, it is difficult to make a bullish case for natural gas. It seems that the greater likelihood is that we continue to trade in the low $3 to the low $4 range for the foreseeable future. On a trading basis we will hold current short positions,” he said.

Trading accounts should continue to hold a short October position initially established when June was trading at $4.35, and risk 25 cents on the trade. End-users should stand aside, and physical market longs should continue to hold a short October position from $3.75 to 3.95. They should also continue to hold a short November-March strip from $4.50 to 4.60, DeVooght said.

Addison Armstrong of Tradition Energy sees the market currently walking a narrow “$3.50” tightrope. “Gas prices have now spent more than two weeks trading above $3.50 as traders balance late-summer heat and increased cooling demands across the Midwest and the most active stretch of the hurricane season against the fast-approaching start of shoulder season and the near-record production levels of gas that overhang the market,” he said.

Energy Metro Desk in its Early Bird survey of this week’s storage report found an average injection of 57 Bcf from a sample of 16 traders and market pundits. The range on the survey was 43-64 Bcf.

Tom Saal, vice president at INTL FC Stone in Miami, is looking for the October futures to test last week’s Market Profile value area at $3.622 to $3.534 before moving on and testing $3.419 to $3.333. “Buyers be ready,” he said.

Tropical Storm Ingrid in the southernmost Gulf of Mexico has moved onshore Mexico and is expected to disintegrate. In its 8 a.m. EDT Monday report the National Hurricane Center also said the system formerly known as Humberto was moving to the west-northwest at 15 mph but had a 90% chance of becoming a tropical cyclone once again.

In overnight Globex trading October crude oil fell $1.55 to $106.66/bbl and October RBOB gasoline dropped 4 cents to $2.7282/gal.