Natural gas futures were off to the races Monday as concerns about prolonged heat and potential tropical storm development overtook the market. The August natural gas contract, which expires Thursday, jumped 46.6 cents over Friday’s close to settle at $6.605.

After gapping higher in the overnight trading session, August natural gas opened Monday at $6.360 and continued higher from there, taking out resistance at $6.450. Some traders saw Monday’s action as firm support for the case of the bulls.

“We really saw a steady buying stream all day long Monday,” said Brad Florer, a broker with ICAP Energy. “We didn’t have one decent pullback throughout the course of the day. In addition, this was the second day in a row that we basically closed on our highs. We opened up through last week’s high and then we took out the $6.45 recent high, so the technicians were happy as things begin to gather momentum. If we can get this thing north of $7, you’ll probably see some more technical buying coming in.”

With much of the country still reeling from last week’s heat wave, it appears there is even more in store for this week. “I think basically the temperatures are starting to weigh on people’s minds and many are expecting a minuscule storage injection report this week,” Florer said. “Traders are starting to wonder if we are going to start seeing some action on the storage front relative to where it has been and what it is going to look like going forward.”

Florer pointed out that this move higher also lines up with historical charts. “Typically your seasonal bottom gets put in right around this time, so we may have already seen the low. If you’re short, you have to be concerned that we have seen the low,” he said. “If you’re a bull, then you’re guardedly optimistic for higher prices. You have to remember, some of the bulls two weeks ago thought we had seen the low, and then we had a pullback, so they are probably a little bit leery here. I think we still need some validation, but at least the upside is seeing some motivation out there for a change.”

The National Weather Service forecasts that for the week ending July 29, major metropolitan areas will experience an above-normal accumulation of cooling degree days (CDD). New York, New Jersey and Pennsylvania are expected to see 80 CDD or 20 above normal, and the industrialized Midwest states of Ohio, Indiana, Michigan, Illinois and Wisconsin, are forecast to swelter under 81 CDD, or 23 greater than normal. Both areas are running ahead of normal seasonal accumulations. The NWS reports that the Mid-Atlantic states above have tallied 399 CDD, or 89 more than normal, and the Midwest have garnered 383 CDD, or 14 more than normal.

In the Midwest, Chicagoans over the weekend got a welcome respite from last week’s heat and humidity, but all that is about to change as the city braces for a week highlighted by heat, humidity, and frequent showers and thunderstorms. “Highs should approach 90 on Monday but with only moderate humidity levels. By Tuesday, dew points should reach the uncomfortable 70º threshold, where they should remain for the rest of the week,” said Steve Kahn, meteorologist with WGN-TV. He added that excessively high temperatures are not expected as cloudiness and an almost daily occurrence of showers and thunderstorms should keep daily highs between the upper 80s and lower 90s.

On the storm front, while some organizations are lowering their original storm number estimates, the National Hurricane Center (NHC) is warning the public about a surface low pressure area centered just east of La Pesca, Mexico.

Andover, MA-based WSI Corp. said it now expects the tropical season to have 14 named storms, seven hurricanes, and four intense hurricanes (category three or greater), which is down from its original forecast of 15 named storms, nine hurricanes, and five intense hurricanes. The forecasting firm said the reasons for the reduction in numbers are:

“While we still expect a relatively active year, it appears that conditions are in no way similar to last year’s record season,” said WSI seasonal forecaster Todd Crawford. “In fact, tropical ocean temperatures have cooled quite a bit during the last couple of months, and are now only slightly warmer than normal. Further, it appears that we may be in the very early stages of the next El Nino event, which increases the odds of a weak finish to the year. We now expect a year more similar to 2000 or 2003, both of which had 14 named storms.”

The activity off of Mexico is currently moving at five-to-10 mph, the NHC said, adding that thunderstorm activity has increased and become a little better organized over much of the western Gulf of Mexico and Bay of Campeche. The government agency said winds have been clocked at 40-50 mph and a tropical depression could develop early this week “if the low pressure center remains offshore.”

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