Natural gas futures surged again yesterday amid concerns thatproduction shortfalls associated with a sudden barrage of tropicalstorm and hurricane activity will put pressure on an already tightsupply-demand situation. Fresh off a 28-cent price run late lastweek, the September contract tacked on an additional 12.6 centsyesterday to finish at $3.064 after notching a fresh high at $3.08.Estimated volume was healthy, with 101,460 contracts changinghands.

Hurricane Bret made landfall between Brownsville and CorpusChristi, Texas Sunday, bringing winds up to 130 mph and more than afoot of rain in some areas, according to Federal Emergency ManagementAgency. But by Monday morning, many traders were already looking pastthe minor supply shut-ins (see relatedstory) associated with Bret to focus on three storms, which couldpose a threat in the days to come. Having issued its last advisory onBret Monday evening, the National Weather Service is now trackingthree storms-Tropical Storm Cindy and two disturbances in theAtlantic.

On balance, these storms do not pose an immediate threat tooffshore natural gas production in the Gulf of Mexico, but tradersaren’t taking any chances. “This continues to be an excellentbuying opportunity, a Gulf trader said. “This is not just hurricanehype. There is a growing perception that supply will simply not beenough to meet winter requirements and that situation could beexacerbated by a supply disruption now.”

And fundamental traders are not alone in their concern over theweather. Even dyed-in-the-wool technical analysts like NewMexico-based Kase and Company admits if the “weather threat”continues, $3.45 is likely. “Even if in the short run the marketslacks off, it would be reasonable to expect in the longer term, abull run would take the front of the market at least some $0.50better than we have seen with the September contract,” the groupwrote in its weekly KaseFax.

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