Pulling itself back up from its low $4.60 level late last week, October natural gas futures rebounded slightly following the long holiday weekend. The contract traded as high as $4.83 earlier in the session, but settled at $4.79, up 11.5 cents from Friday.

The price rebound was unaided by Hurricane Frances, which ended up shutting-in only a very small part of the Gulf of Mexico’s natural gas and crude production for a very short period. However, some traders said that Category 3 Hurricane Ivan could have factored into the market on Tuesday. Weather watchers predict that Ivan could take a more westerly course, hitting the Gulf more head-on.

“There is a lot of trepidation about Ivan,” said Ed Kennedy of Commercial Brokerage Corp. He noted that the rebound Tuesday had to do with short covering related to Ivan, as well as buyers protecting against the move higher by buying the winter months.

“Right now, the center of the core of probability puts Ivan right into the Gulf on Sunday and Monday,” he said. “If it gets into the central Gulf, it could turn into a monster hurricane with barometric pressures below 920 millibars. Hurricane Andrew in 1992 was 930 millibars, so people are worried about it.

“However, we have learned one thing with Charley and Frances, long range forecasts aren’t necessarily worth spit on where the storm will go,” Kennedy added. “Anything that reaches Category 4 or 5 creates its own environment. We are going to have to wait till Thursday or Friday to learn its true path. That being the case, you will probably see us range-trading here for Wednesday and Thursday.”

As for the latest on Hurricane Ivan, the National Hurricane Center said the Category 3 hurricane was approximately 20 miles west/southwest of Grenada as of 5 p.m. (AST). The storm was moving toward the west at speeds nearing 18 mph with maximum sustained winds near 120 mph.

Tim Evans of IFR Energy Services warned that just because Charley and Frances failed to impact Gulf production significantly, Ivan should not be discounted. He warned that Ivan is expected to cross western Cuba over the weekend, and could prompt production shut-ins in the central Gulf next week.

“October natural gas is trying to get its legs back under it by consolidating inside of Friday’s $4.62-4.84 trading range,” he said. “This possible interim floor is in the vicinity of the $4.60 spot low from last November. Failure to hold in this vicinity would redirect traffic toward the $4.39-4.40 lows of September-October.”

However, Evans noted that the currently secure natural gas storage situation could allow for even lower levels to be explored before a lasting bottom is found. On the upside, Evans sees minor resistance both at Friday’s $4.84 high and as far north as $4.90, with a swing past that point setting up a possible check on intermediate-term resistance currently trailing the market at $5.08 and 5.35.

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