Fueled by heat concerns and an upward revision in projected Atlantic hurricane activity, September natural gas futures kept their upward momentum Tuesday as the contract continued to take out old continuation highs.

After starting the day a little unsure of its direction, the prompt month began its climb at noon EDT. After reaching a peak of $8.41 later in the day, September natural gas plateaued for the remainder of the session before settling at $8.378, up 22.4 cents from Monday’s close.

On the continuation chart, action on Tuesday took out the January 2005 contract’s $8.23 high, which was reached on Nov. 29, 2004. Next up is $8.75, which the December contract reached on Nov. 4, 2004.

“Is this whole move Tuesday just on weather?” a Washington, DC-based broker asked. “It has to be technical follow-through because when we came in this morning, natural gas futures really didn’t look like they wanted to follow through. Every time we have been above $8, the thing has seemed a little top-heavy, but not on Tuesday.”

In addition to forecasts of heat, new information on the 2005 Atlantic hurricane season also got the traders’ attention. While everyone already knew that this hurricane season was expected to be a big one, the National Oceanic and Atmospheric Administration (NOAA) on Tuesday raised its activity prediction, warning that up to 14 more tropical storms and five more major hurricanes could still be out there (see related story). The upward revision is significant when compared to NOAA’s earlier prediction. In May, the agency predicted that the 2005 season would be above normal, with up to 15 tropical storms and nine hurricanes (see Daily GPI, May 17).

“I think the hurricane forecast revision along with near-term weather forecasts helped boost natural gas futures on Tuesday,” she said. “There’s no question that the six- to 10-day weather forecast remains bullish, but the eight- to 14-day forecast looked like it is beginning to moderate.

“The whole energy complex is really looking strong,” the broker added. “You had crude running up on Saudi King Fahd’s passing on Monday, and not giving much back. There was a rash of refinery problems really affecting the unleaded gasoline. From what I can see, crude and natural keep feeding off of each other. Crude resisted, but when natural made those highs it relented.

“Technically the markets look great,” she said. “You really can’t fight it. We have been taking out these highs regularly and we are now back to some elevated levels that we haven’t seen in a while.”

Just when you thought it was safe to go outside, the National Weather Service (NWS) is forecasting a return of heat and humidity to populous Midwest and eastern seaboard markets. The NWS is predicting well above normal cooling degree days (CDD) across the Midwest and Mid-Atlantic. For the week ending Aug. 6, Ohio, Indiana, Michigan, Illinois and Wisconsin are expected to suffer 84 CDD, or 28 above normal. The industrialized states of New York, New Jersey and Pennsylvania are forecast to sweat through 72 CDD, or 14 more than normal.

Weather bulls in major energy markets will be in the driver’s seat as well. AccuWeather forecasts a high of 92 for New York City through Thursday before peaking on Friday at 94. The heat index is expected to remain in oppressive triple-digit territory with a high of 103 on Wednesday. Chicago is somewhat more fortunate. Following high temps and heat indexes expected to reach 96 and 102 respectively Tuesday, Chicago weather is expected to ease to a high of 87 on Thursday and 81 on Friday. Heat indices will fall as well, declining to 87 and 79 on Thursday and Friday respectively.

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