Despite word that the fourth tropical depression of the Atlantic hurricane season had formed in the far eastern Atlantic, the natural gas futures rally of last week ran out of steam on Monday after encountering resistance just north of $7. The September contract recorded a high on the day of $7.120 before settling at $6.794, down 2.6 cents from Friday’s close.

Traders have been forced to confront the fact that a series of tropical waves are looming in the tropics at the same time that a majority of the United States is dealing with continued forecasts of warm weather.

AccuWeather reports that what may develop into Tropical Storm Dean emerged from the West African coast on Friday and continues to move in a westward direction across the Atlantic. “This weather system was showing good potential for strengthening to a tropical storm and, ultimately, a hurricane, while plying its way westward under the influence of the trade winds,” said Jim Andrews, a meteorologist with “Friday, [Tropical Depression 4] will likely approach the Lesser Antilles, potentially as a hurricane.”

Prior to the tropical depression classification, meteorologist Tom Skilling of the WGN Weather Center in Chicago said, “A tropical wave near the Cape Verde Islands is forecast by several computer models to become Hurricane Dean later this week.”

AccuWeather is also monitoring two tropical waves in the northwest Caribbean, one on the northeast tip of the Yucatan Peninsula and the other west of Jamaica. From Tuesday into Wednesday, these systems will need to be watched for tropical organization. At best, they could reach tropical storm status before moving onto land across northeastern Mexico and South Texas, the forecaster said. In addition to the Caribbean waves, two other waves in the Atlantic are being followed.

“The anticipation of the storm helped futures push higher over the last couple of sessions, but I don’t know why we went up as high as we did,” said Tom Saal with Commercial Brokerage Corp. in Miami. “Obviously, other people in the market did not know why as well because we ended up crashing back down.”

The broker added that past front-month settles could be telling. “The March contract settled at $7.547, April closed out at $7.558, May at $7.508 and June at $7.591, so we have four recent months exiting right around that $7.500 area,” he said. “I think it is safe to say that you will find pretty formidable resistance in that trading area now that we have been trading below that number during the first few months of summer. The market does have a memory and I think it was expecting hot weather earlier and a few more storms earlier. Because the market did not get those things, it started to trade below that $7.500 number. Now that we are getting some heat and some potential storms, it might end up being a case of too little too late.”

Discussing the potential strengthening and path of Tropical Depression 4, Saal said that with the storm still very far away, it is still a situation where “this, this and this need to align in order for the Gulf of Mexico to be worried. It is just too early. Living in the cone down here in Miami, you definitely have to wait and see. These models can change overnight.”

Looking at support basis the September contract, Saal highlighted $6.720. As for resistance, the broker sees $7.060. “We have a tremendous range here now that volatility has gotten back into the market, so you have to be careful of the big swings.”

Although much of the country can expect to endure above-average temperatures, the large energy markets of the Northeast and Midwest can expect more tempered conditions. “The bottom line is that much of the U.S. will remain in above-average demands for cooling energy for much of the week to 10 days, but the northeastern U.S. and Great Lakes will see demands back off to average levels as we head through the week,” said meteorologist John Dee.

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