Piggybacking on the $2.69/bbl July crude futures gain, stifling heat in a number of key regions and widespread speculation on storm rumblings in the tropics, July natural gas futures on Monday once again punched above the psychological $13 barrier. After trading between $13.029 and $13.266, the prompt-month contract finished the day’s regular session at $13.203, up 20.9 cents from Friday’s finish.

“The natural gas market received some bullish news Monday by way of the mainstream press, which was a little bit of a surprise because everything you see has been about oil,” said a Washington, DC-based broker. “A Wall Street Journal article Monday basically pointed out the United States pulled more gas out of storage this past winter than it had expected to, so if a hurricane gets into the Gulf of Mexico there is going to be big trouble. It also noted that some weather forecasters are looking for a warmer-than-normal East and South this summer, which adds to the bullish case and further puts a strain on supply.

“Our natural gas charts have been so darn bullish. If you have anybody who is just trading technically, then you are just buying the dips still because there is no reason not to. Natural gas is still a bargain [compared] to heating oil and the bulk of hurricane season and summer heat still lie ahead, so based on where we are on the calendar, people are afraid to sell this thing yet.”

As to whether the all-time front-month futures high of $15.780 is back in play, the broker said at this point the $14 price point is currently being kicked around. “If you make it through $14, technically, there is nothing really standing in the way of that old all-time high that followed Hurricanes Katrina, Rita and Wilma in late 2005,” she said. “Of interest in the near term is that trading on Friday and Monday stayed within last Thursday’s bar. Technically, we are nowhere until we either get over Thursday’s high of $13.350 or under Thursday’s low of $12.625. The way things are looking, I think the high has a better chance of a visit first. Until we break one way or the other, we are in no-man’s-land.”

Although petroleum markets rose over the weekend on news that Saudi Arabia could only make another modest increase in production, natural gas seems to have its own bullish set of parameters to deal with. Saudi Arabia did increase production by 200,000 b/d in May and, according to CNN.com, pledged to increase production by another 300,000 b/d in July. That brings total production to 9.7 million b/d, but that has already been factored into the market, analysts say. On Monday July crude gained $2.69 to close at $134.62/bbl.

Others see natural gas charting its own course. “I don’t know if the relationship with crude is intact. That’s always a very nebulous relationship. Maybe there are enough inexperienced traders linking natural gas to crude oil so you have to give it some credence. Maybe from a psychological perspective,” said George Ellis, director of risk management at Bank of Montreal in New York.

“Natural gas is strong on its own merits. Thursday was a low injection, and I’m hearing from weather guys that the waves coming off the Cape Verde Islands are looking kind of interesting for this time of year; there have been so many of them. Natural gas is just firm on its own fundamentals and it is not because of crude,” he said.

AccuWeather.com is following two tropical waves, one at 45W and 16N and the other at 84W and 21N. AccuWeather.com meteorologist John Kocet noted that while there is a lot of “stored energy” currently in the Gulf of Mexico, there is “nothing to light the fuse” as of yet.

“The Gulf of Mexico, Caribbean and western Atlantic are all storehouses of energy for would-be tropical storms and hurricanes,” he said. “All that is needed is for some spark to set the whole thing off. Typically the tropics are not very active this early in the season though there have been very memorable June storms.”

Kocet highlighted Hurricane Audrey, which formed over the southern Gulf of Mexico on June 25, 1957. Audrey, which “caused catastrophic damage” across eastern Texas and western Louisiana, is the only storm to reach Category 4 status in the Atlantic Basin during June, he said. He also highlighted Agnes, which impacted the entire Mid-Atlantic state region in June of 1972. “Wind wasn’t a big problem with Agnes, but the rainfall was unprecedented. From Virginia northward, up to a foot of rain produced some of the worst flooding of all time,” he said.

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