October natural gas futures traded in a wide range on Tuesday as bears plumbed support lines before the contract rallied back in the afternoon. The prompt month traded between $6.195 and $6.570 before settling at $6.568, down 8.5 cents from Monday’s close.

Following the Globex session overnight Monday, the market appeared poised on Tuesday to give back every penny of Monday’s 37.4-cent gain. However, support down near $6.200 combined with the threat of a storm developing in the Gulf of Mexico late in the week provided just enough cause for a rally.

“This possibility definitely has our attention,” said John Kocet, a meteorologist with AccuWeather.com. “A storm currently just off Florida could strengthen into something more once the circulation gets over the Gulf of Mexico later this week. The winds are right for development, and the water couldn’t be much warmer. The worst case scenario…shows the storm turning into a hurricane this weekend and menacing the western Gulf Coast.”

Some industry insiders were not too impressed with the likelihood of a devastating storm getting into the Gulf. Citigroup analyst Tim Evans said traders are now forced to acknowledge that the storm development prospects are just not all that impressive. “Models continue to indicate potential for some storm development in the eastern Gulf of Mexico over the next few days, but they also suggest that a killer hurricane is unlikely,” he said.

Evans also said the storage situation doesn’t look very promising for the bulls in the intermediate term. “Thursday’s storage report may be constructive in terms of trimming the 260 Bcf year-on-five-year average surplus, but it may not translate into higher prices because future reports are projected to swing back to above-average injections,” he said.

Evans did note that the weather looks somewhat supportive for a majority of the country. The Frontier Weather six- to 10-day outlook for Sept. 23-27 calls for above-normal temperatures for much of the U.S. east of the Rockies, with the West and the Gulf Coast states recording normal readings.

A resurgence of warm weather suggests tempered storage injections for next week’s inventory report. The National Weather Service (NWS) forecasts for the week ended Sept. 22 above-normal accumulations of cooling degree days (CDD) for key energy markets. NWS says the Mid-Atlantic states of New York, Pennsylvania and New Jersey will experience 16 CDDs, or six more than normal, but a broad expanse of the industrialized Midwest will toast under an even greater CDD differential. Ohio, Indiana, Michigan, Illinois and Wisconsin will see 31 CDDs, or 20 more than a normal tally.

“The (Chicago) area is in the midst of a remarkable four-day temperature resurgence likely to rank among the four largest here in September,” Tom Skilling, WGN-TV meteorologist in Chicago, said Tuesday morning. He added that there have only been four previous occasions since Chicago weather records began in 1871 when September temperatures rebounded more than 50 degrees in a span of four days. “A high of 89 degrees or warmer Tuesday coming off Saturday morning’s record breaking 39 degrees — the coldest temperature to occur here this early in 117 years — would make this the fifth,” he said.

Following Monday’s $6.653 close, some traders were adjusting their estimate of any near-term price advances. “We are now viewing the $6.500 level as support to this market and would consider near-term upside possibilities as existing to the $6.78-6.88 zone, a chart gap going back to about mid-August,” said Jim Ritterbusch of Ritterbusch and Associates. Longer term, however, the outlook may not be quite so positive. “From a longer-term perspective, we remain reluctant to rule out another $5.00 price handle since supplies are expected to remain proximate to record levels unless some tropical storm activity develops to curtail production.”

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