After trading sub-$13 in the Sunday Access session, November natural gas opened lower on Monday and tested even further south with a low of $12.70. However, a late rally forced the prompt month to close at $12.975, down 25.1 cents on the day, but very near the $13.03 high for the session.

“We’ve come right down and tested this uptrend support line and the market managed to rally,” said a Washington, DC-based broker. “The selling we had Monday morning really smacked of technical selling.

“The sharp natural gas rally starting around 1:30 p.m. was pretty interesting. It had its initial sell-off, made a little rally attempt but failed. Then after making another bottom around 1:30 p.m., which wasn’t quite as low, the sharp rally took off from there,” he said. “Failing to retest the lows really set off the classic response: Get on board cause the train is going to take off here.”

The broker noted it appears traders are starting to look at natural gas supplies for the winter, and some of them aren’t liking what they’re seeing. “The traders have already done the math for the winter heating season and I think it is beginning to seep into the market’s thinking,” the broker said. “Traders have to make the decision of whether or not we are looking at a Hurricane Ivan redux from 2004, a situation where we get back a fair amount of the shut-in gas, but we end up stuck with some medium-term infrastructure problems that withholds the remaining flows. It’s not a good picture. We really could be in a vulnerable place as we start into winter.”

Weather forecasts for winter continue to roll out. AccuWeather.com’s Joe Bastardi said while he expects temperatures for November to be back and forth, the colder weather in the Northeast should kick-in in December. He also pointed out that a super active hurricane season like the one seen in 2005 normally prefaces a colder than normal winter.

IFR Energy Services’ Tim Evans said that with some traders out for the Columbus Day holiday and the market questioning whether or not the downside had been exhausted yet, he expected trading Monday to be “quiet,” but “defensive,”

He noted that natural gas futures had “fallen to a new low on the absence of a fresh hurricane threat in the Gulf of Mexico. Otherwise, it looks like the price action will be driven by technical factors, as there’s not much fresh fundamental news to go on.”

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