Back from the three-day weekend, bulls took up where they left off last week as they managed to propel natural gas futures prices higher Monday for the second-straight session. But in contrast to last Thursday’s technical short-covering advances, Monday’s uptick was more basic in nature as buyers bid up the market on the first signs tropical storm activity.

The July contract jumped 6.8 cents higher to close at $6.244. The out-months followed along, resulting in a 6.4-cent increase for the 12-month strip.

According to a report issued by the National Hurricane Center, a broad area of low pressure roughly 200 miles off the southern coast of Louisiana was producing widespread cloudiness and thunderstorms over much for the central and eastern Gulf of Mexico Monday. As of press time last night, the NHC was continuing to monitor the situation and had scheduled an aircraft to investigate the disturbance for signs of organization or possible strengthening.

Although the 2004 Hurricane Season is only 14 days old, it is not too early for storms to start churning in the Gulf of Mexico. In mid-June 2001, Tropical Storm Allison rumbled across the Gulf of Mexico, the Gulf Coast states, and later into the Southeast. In late June of 2003, Tropical Storm Bill formed in the Gulf of Mexico and came onshore in Louisiana. In both cases, however, the storms’ net results were bearish on prices as supply was unaffected and rain and cloudy skies reduced gas demand.

But there were traders Monday who viewed the NHC report as a harbinger of things to come. “It was enough to get natural gas to shrug off the losses in crude oil,” said Tom Saal of Commercial Brokerage Corp. in Miami.

Looking ahead, Saal is not overly impressed with the market’s two-session, 16-cent rally. “For the first time in a year, the market failed to make a higher-low after making a higher-high in late May. While this does not end the long-standing uptrend, it gives the bears something to point to.”

Another bearish indicator can be found in the latest Commitments of Traders report. According to the Commodity Futures Trading Commission, non-commercial traders reduced their net long position by roughly 19,000 during the week ending June 8. That, says Saal, combined with the fact that the July contract is currently below its 40-day moving average ($6.259), is a bearish predicament.

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