Natural gas futures followed the Dow Jones Industrial Average lower for a second straight day Tuesday while crude recorded a rebound of sorts. November natural gas shaved another 6.7 cents to close at $6.768, further validating Monday’s penetration of long-holding support at $7.028.

After dismissing the latest attempt by the Federal Reserve to shore up credit markets, the Dow dropped to a five-year low by shedding 508 points Tuesday, bringing the two-day free fall to 877 points. Despite the U.S. economy’s continuing struggles, November crude actually bounced back above $90/bbl on Tuesday to close at $90.06/bbl, up $2.25 from Monday’s close.

With the U.S. economic problems now spreading globally, analysts, traders and brokers agree that most markets — commodity and equity — will be greatly influenced by each twist and turn during the crisis.

“When natural gas got below $7 on Monday, I think that really opened up some more room to the downside,” said a New York trader. “We had been banging our head off of support just above $7 for the last month, so when it gave way, it really gave way. With Wall Street continuing to fail as stock prices tank, I think it will be interesting to see what happens when some cold weather finally arrives. Will natural gas futures prices follow fundamentals, or will they be led by the economy crisis?”

Commercial Brokerage Corp.’s Tom Saal said he believes the market is currently following a form of the axiom “buy the rumor, sell the fact” with regards to the economy. “Natural gas is actually reacting to the expectations that the economy is going to evolve into a major recession,” he said. “Since we haven’t had a major recession in this country since the first natural gas contract traded in 1991, no one really knows exactly how the market is going to react. There is no prior history as far as natural gas futures go. I think the expectation of the recession is driving the price of natural gas as well as other commodities.”

Looking at the current price landscape, Saal said he believes natural gas futures will likely continue to grind lower from here unless the fears of the recession are unfounded. “Unfulfilled expectations can make for an interesting market really quickly,” the broker added. “It is important to note that the economy is not yet in a recession, and if the expectations for a major recession go unfulfilled, then that could be a big bullish factor.”

Others also see broader financial and commodity market developments continuing to pressure natural gas futures. “While we eventually look for the market to move back up into the $7-8 zone, we are also conceding to some additional price weakness as a result of bearish overflow from the oil complex and commodities generally,” said Jim Ritterbusch of Ritterbusch and Associates. According to Ritterbusch, the bulls are going to have a tough time this week. “We still look for [Monday’s] breakdown to new lows for this year to skew this week’s momentum toward the downside with global financial developments easily outweighing basic supply/usage developments,” he said in a note to clients.

Bulls may be able to find some solace in renewed tropical activity. Tropical Storm Marco, which made landfall in southern Mexico Tuesday and was quickly downgraded to a tropical depression, was a not so subtle reminder that the hurricane season remains in full force.

While the reminder was received by the energy industry, some forecasters basically considered Marco to be a false alarm. “The cloud that was named Marco is a pitifully small thing centered in the extreme southwestern Gulf of Mexico,” said John Kocet, a meteorologist with “This disturbance will have no direct impact on the weather across the United States. There has got to be a better way to distinguish between systems like this, which are meaningless, and those that pose a significant threat to our coastline.”

Looking out into the tropics, Kocet noted that there was not much going on. “There is a chance that conditions will become more favorable for tropical development in the Caribbean next week,” he said. “We’ll keep a watch on that.”

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