After failing to break out to the upside on Monday, natural gas futures traders pushed the prompt month contract lower Tuesday, breaking below what some market participants thought to be a double bottom at $7.120. May natural gas put in a low of $6.970 before settling at $7.065, down 17.9 cents on the day.

Some top traders see the natural gas market as “guided” by the petroleum market until substantive fundamental factors such as the summer weather outlook and hurricane season are in place. May crude settled 51 cents lower Tuesday at $66.23/bbl.

“The gas market continues to seek guidance from the petroleum complex given the lack of fundamental input. Attaching fundamental explanation to each significant price swing is becoming increasingly difficult as the temperature-related weather factor dissipates and since the hurricane influence is still months away,” said Jim Ritterbusch of Ritterbusch and Associates.

Months away or not, the important Klotzbach-Gray hurricane forecast for 2006 shows above normal hurricane activity for the Atlantic Basin, but below what was observed in the disastrous 2005 season (see related story). “We continue to foresee another very active Atlantic basin tropical cyclone season in 2006. Landfall probabilities for the 2006 hurricane season are well above their long-period averages,” Philip J. Klotzbach and William M. Gray said in their updated forecast released Tuesday.

For 2006, they continue to forecast 17 named storms, nine hurricanes and five intense hurricanes. In 2005 there were 27 named storms, 15 hurricanes, and seven intense hurricanes. Compared to the benchmark 1950 to 2000 period, the 2006 forecast is higher. For 1950 to 2000 there would typically be 9.6 named storms, 5.9 hurricanes, and 2.3 intense hurricanes, the report showed.

“There was no change in the forecast,” said Ed Kennedy, a broker with Commercial Brokerage Corp. in Miami. “We have had that in the market for a while now. Once the first hurricane forms…yeah, that will be good for a buck, but not now.”

Kennedy said that while the Klotzbach-Gray forecast remained unchanged from December, the interesting thing that was discussed was current water temperatures. “Water temperatures are 2-4 degrees Celsius higher than they normally are this time of year, so we will have to see how that plays out a little bit down the line.”

Looking at recent trading action, Kennedy told NGI that the market appears content right where it is. “On Monday, we tested the exact upper end of the trading range we have been in. On Tuesday, we were taking a look at the lower end.”

As for the market bottom talk, Kennedy said if there was going to be a double bottom it would be at $6.66. “I don’t think we are going to see $6.66,” he said. “The $6.88 is even going to be a problem because you still have all of the utilities that have to do their hedging for the injection season. I don’t think we are going anywhere. There is nothing new in the market; nothing for the bears or bulls to pin their hopes on. My advice is to get ready to buy it anytime you see a six in front of it.”

For the moment, Ritterbusch is looking for a range-bound market as well. “Our broader view of this market, extending out through the remainder of the spring period, is for little net price change with the nearby contracts fluctuating about 50-60 cents on both sides of the $7.00 mark. We are maintaining a neutral trading stance in anticipation of further price consolidation within the approximate range of the past month,” he said in a note to clients.

Funds and managed accounts aren’t waiting for prices to continue lower. The Commodity Futures Trading Commission reported Friday that as of March 28 noncommercials held a net short (futures only) position of 28,386 contracts, down from 38,775 net short the week before.

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