Just when you thought it might be safe to venture back into the natural gas futures market, a day like Tuesday pops up. While the September contract did not break its $9.91 record set on Friday, it did rebound from its soft performance Monday.

Spurred by a run in unleaded gasoline due to an Exxon Mobil boiler problem related to a fluid catalytic cracker at the company’s 360,000 b/d Beaumont, TX refinery, prompt month natural gas notched a $9.88 high on the day in Tuesday morning trade. The contract ended up coming off of that level, but still settled at $9.752, up 21.2 cents on the day.

Tuesday’s action sent mixed signals through the industry. While natural gas obviously rebounded off of Monday’s weak $9.54 settle, the prompt month also failed to eclipse Friday’s $9.91 mark. The question now is whether it is time to call it a top and for the bears to take control, or is the market seeing just another pause before the bulls take things to the next level. At this time, the answer remains unknown.

“The markets probed the upside early in the session, with gasoline leading the way on a boiler problem at Exxon Mobil’s 360,000 bbl/d Beaumont, Texas refinery,” said Tim Evans of IFR Energy Services. “None of the markets achieved new price highs, however, and this may only ultimately help to confirm that a top of some proportion has been established. There may still be a chance for prices to hold the recent range and attempt another swing higher if the DOE petroleum inventory data supports such a move.”

September crude on Tuesday climbed as high as $66.85/bbl before settling at $66.08, down 19 cents on the day. Gasoline notched a high of $2.0120/gallon before closing at $1.9836, up 2.15 cents from Monday.

“Having been turned back from the highs once today, we think the market will do its best to hold the range and then make its more critical intermediate-term decision Wednesday morning in the thin conditions just ahead of the data and the rush of volume to follow,” Evans added. “The natural gas market was the strongest performer, finishing within easy reach of its recent highs. We see clear evidence of an assumption that crude oil will remain in its uptrend, providing cover for the lack of a physical shortfall in natural gas. It is hot, but not as hot as it had been and the hurricane watch sees nothing threatening at the moment. We think that leaves natural gas vulnerable to correction too, although it will clearly take a while longer for the market to reach that conclusion.”

During the week ended Aug. 12, September natural gas futures jumped 88.8-cents to settle at $9.588. Many believe that another 89-cent rise may be problematic this week, especially considering moderating temperatures. According to National Weather Service (NWS) forecasts, the bulls may not have the oppressive heat and humidity of last week in prominent energy markets to boost prices. The industrial Midwest and Mid-Atlantic were hit with hot, muggy weather last week, but cooler temperatures are expected to prevail this week. For the week ended Aug. 13, the Great Lakes states of Ohio, Indiana, Michigan, Illinois, and Wisconsin suffered through 77 cooling degree days (CDD), or 26 more than normal. New York, New Jersey, and Pennsylvania sweltered under 90 CDD, or a plump 36 more than normal.

For the week ending Aug. 20, the NWS forecasts that the same Midwest states above should receive 56 CDD, or just 12 more than normal. The Mid-Atlantic is expected to tally 57 CDD, or 11 more than normal.

However, Bulls have been known not to give up easily. “The physical market is still very strong and it is not going to roll over anytime soon. I don’t expect a significant decline until later in the week,” said a Houston broker. He said once prices started to decline, the September contract would ease to $9.30 and then test as low as $8.70. “Once you get bullish news and the market doesn’t move, it’s probably priced into the market. Inventory reports this week on both petroleum and natural gas will be important.”

Longer term weather forecasts may be what is on the Houston broker’s mind. The National Weather Service six-to-10 day forecast calls for below normal temperatures for a vast section of the nation’s mid-section centered over Oklahoma and extending from Indiana to West Texas. Above normal readings are forecast for areas west of a line from eastern Montana to Arizona, eastern New York, eastern Pennsylvania and New Jersey as well as New England. South Florida is also expected to be warmer than normal.

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