The natural gas futures market was at an impasse Tuesday as traction in either direction appeared hard to come by. After trading a slim $6.810 to $6.950 range, the November contract finished Tuesday’s regular session at $6.863, up 1.7 cents from Monday’s close.

The bullish case is still lacking support from the tropical weather picture. Despite a number of waves and disturbances, the lack of organization in the Atlantic has many seeing a repeat of the lackluster 2006 Atlantic hurricane season.

“There are certainly plenty of clouds spread out across the tropics at this time, but very little in the way of organization,” said Brett Anderson, a meteorologist with AccuWeather.com. “The most prominent feature is a tropical low just off the east coast of the Yucatan Peninsula. Atmospheric conditions are favorable for development, but with the system about to move inland there is just not much time left for much in the way of organization. There are also a couple of tropical waves out in the Atlantic, but they are fairly weak at this time.”

With the Atlantic hurricane season winding down and storage levels currently sitting comfortably above 3.2 Tcf, market bulls have been able to find some support in the winter outlook for temperatures and prices.

Natural gas prices are expected to take a little more money out of the pockets of consumers this winter. Not only is the price of natural gas expected to be higher than the 2006-2007 winter, but Americans are expected to use more of the resource to heat their homes as the temperatures are also expected to be colder.

According to the Energy Information Administration’s just-released Short-Term Outlook for October and Winter Fuels Outlook, gas prices this winter are likely to average $13.14/Mcf, which is 78 cents/Mcf more than last year’s winter (see related story). U.S. households using gas as their primary heating fuel are also expected to see a 3% rise in consumption. While no cold records are expected to be broken this winter, the National Oceanic Atmospheric Administration’s most recent projection has the upcoming winter in the Lower 48 states forecast to be 4% colder than last winter, but 2% warmer than the 30-year average.

As with most winters in the natural gas market, temperature will ultimately tell the tale of price direction. “There’s little reason to suspect that the markets won’t be as volatile as the weather,” said Jay Levine, a broker with enerjay LLC.

He noted that while the market is sitting comfortably with current gas supply and the hurricane season is largely a repeat of last year’s nonevent, upcoming temperatures will definitely set the tone. As a result, Levine said the “energy bull” is “alive and well.” He noted that “buying the dips” is still his preferred course of action. “That doesn’t mean I wouldn’t look at the short side of the market(s) — on any short-term basis — but it does mean I still believe that any ‘dip’ will be short-term and limited both in scope (price) and (time) duration.”

For support, Levine sees $6.755, followed by $6.500 and $6.250. On the upside, the broker has $6.875, $7.000 and $7.500 as numbers to watch.

Some market watchers expect short-term technical support levels to hold as current weather conditions remain modestly supportive. “I think the market may hold these current levels,” said a New York floor trader. Longer term, the trader said “there was no reason for prices to be up this high. Although short-term $6.750 may be a good support number, there is no weather, and no storms on the horizon. I was talking to a bank, and they were looking at prices in the $6 area by the end of the month and possibly $5.750, but they may have just been talking their book.”

Market technicians suggest Monday’s 22.7-cent decline of November futures to settle at $6.846 may mark the onset of a more protracted downtrend. “Monday’s minimum target was $6.825 and Monday held a $6.826 low. While Monday closed weak it also very precisely held the target of a potential five-wave decline from $7.505,” said Walter Zimmerman of United Energy. Zimmerman pegs near-term support at $6.825 and $6.620.

Weak technicals or not, there is little denying that unseasonably warm weather will likely take a toll on storage injections. The National Weather Service forecasts an above-average number of cooling degree days (CDD) for major energy markets. For the week ended Oct. 13, New York, New Jersey and Pennsylvania are predicted to have 17 CDD, or 15 more than normal. Ohio, Indiana, Michigan, Illinois and Wisconsin are expected to endure 29 CDD, or 26 more than normal.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.