After gapping lower at the open further beneath the psychological $7 level, November natural gas futures spent Tuesday’s session exploring even lower. The prompt month bottomed out at $6.61 before settling at $6.636, down 35.7 cents on the day.

The rest of the winter strip followed suit, settling lower by 16 to 26.3 cents. Despite the drop on the day, November and December were the only two current winter months to settle below $8.

“Tuesday was generally a weak market. There was really nothing out there to pin any bullish case on, aside from crude,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “There’s obviously no shortage of natural gas.”

Kennedy said the drop on Tuesday could also be a sign that natural gas futures are attempting to get more in line with the cash market.

“I think we were addressing this incredible premium we have to the cash market,” he said. “It can’t continue. Cash can come up, futures can come down, or both. In this particular instance, I think it is going to be a little bit of both from here to expiration.”

In addition to crude’s recent strength on Nigerian supply concerns, the natural gas futures screen has also been kept higher by continued Gulf of Mexico shut-ins and winter weather forecasts, which are mostly calling for a colder than normal winter.

“Most of the forecasts are calling for a below normal temperature winter with some of the independent forecasters calling for a ‘stealth’ winter,” Kennedy said. He noted that a stealth winter is when it gets cold early and stays that way through the winter without recording any record lows. “A stealth winter is when you have constantly low temperatures with no cycling above or below. If we get that, we could get a big drawdown in storage.

“However, looking at these prices, obviously, a very cold winter with a big drawdown in storage is already factored into this market. Anything to the contrary temperature-wise could really bring futures down hard,” he said.

November crude broke through $54/bbl Tuesday to trade at $54.05 before breaking off significantly to settle at $52.51, down $1.13 on the day. Heating oil for the month also came off to the tune of 1.62 cents to close at $1.4545.

On the shut-in front as of Tuesday, the Minerals Management Service was reporting that 1.7 Bcf/d still remains offline in the Gulf. The cumulative amount of shut-in natural gas from Sept. 11 to Oct. 12 is currently 80.914 Bcf, which is equivalent to 1.818% of the Gulf’s 4.45 Tcf in yearly production.

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