October gas futures gapped 10 cents to the upside at the opening bell Tuesday, leading some to believe a solid bounce would continue higher off Monday’s significant $5.440 low, the lowest a front month has traded in nearly two years. However, the front-month contract reversed course in morning trading and ended Tuesday down 9.6 cents at $5.574, just above a daily low of $5.560.

The winter months took another beating with December down 22.6 cents to $8.884, January and February both down 18.6 cents and March down 18.1 cents to $9.524.

“Everybody is just waiting for this thing to bounce [off a bottom] but it just doesn’t,” said ICAP Energy’s Brad Florer. “Monday was the closest thing we had to a bounce in a while and basically it just got us back to unchanged. Now we are down again, and the winter is off pretty hard. It just feels weak. It has no legs to stand on, and there is so much supply in the system right now. There’s no weather for heating or cooling to speak of.

“If you are a bull you have nothing to motivate you right now; you’re just locked on the sidelines,” he said. “The only thing that seems to be keeping us from going much lower is that we’re oversold here.”

Florer said the out-months still appear to have more room to fall, but further weakness in the front month seems even more certain. “I think a lot of people have been looking at the October-January spread ($4.065 Tuesday) and have been thinking that it seems like a lot. But you just can’t depend on the spreads to act rationally so I don’t know. It sure seems like the out-months have some room to fall. I don’t know if I’d be diving all over it.

“As far as the prompt month, I think there’s a little more confidence… I don’t think the shorts are feeling vulnerable. Technically it looks weak. I think the slide is slowing, but I’ve seen some technicians calling for low $4s. I’m not sure I buy that. But the bottom line is if you pull up a chart and go back to any length of time, we are still up there. Right now $4s seem so cheap, but really it’s not when you look back a couple years ago. I wouldn’t be going into buy this stuff yet.”

Weather bulls can’t seem to buy a favorable forecast. The National Weather Service (NWS) predicts little cooling or heating demand for populous energy markets. For the week ending Sept. 16, the NWS forecasts that New York, New Jersey and Pennsylvania will receive just 10 cooling degree days (CDD) or five below normal. The industrialized Midwest states of Ohio, Indiana, Michigan, Illinois and Wisconsin will see 13 CDD or two below normal. Cooler weather has yet to arrive as well. The Mid-Atlantic states are anticipated to experience 18 heating degree days (HDD) or about normal temperatures, and the Midwest states should enjoy 16 HDDs or six below normal.

And while tropical activity seems to be picking up with Tropical Storm Gordon and now Tropical Depression Eight jumping into view, the expected tracks continue to look nonthreatening to Gulf of Mexico producing infrastructure. The National Hurricane Center expects Gordon to follow Florence into the Northern Atlantic. The route of Tropical Depression Eight, which was 185 miles south-southwest of the Cape Verde Islands at 11 a.m. Tuesday, is far less certain, but early indications project that it is more likely to target the Atlantic Coast than make it into the Gulf.

Jim Ritterbusch of Ritterbusch and Associates sees a hurricane-free Gulf as key to continued price weakness. “Additional price declines to below the $5.00 level cannot be ruled out should the Gulf Coast region remain storm free as this month proceeds,” Ritterbusch said. “Despite Monday’s strong bounce off of our anticipated area of support, we still don’t feel that lows have been placed in this market.”

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