Despite venturing as high as $6.340 in its first regular session as prompt month as a number of eastern metropolises began to heat up, July natural gas futures on Tuesday ended up recording a loss. The contract closed near its $6.100 low on the day at $6.123, down 3.1 cents from Friday.

“We’ve been through so many of these miniature cycles of hope and despair and this is just the latest one,” said Tim Evans, an analyst with Citigroup. “The natural gas market starts out tracking higher with the petroleum markets while receiving a little bit of support from the short-term swings in the weather and then somebody points out how many nuclear power plants have restarted and just how much gas we have in storage and the market flops back lower.”

Evans noted that despite the recent arrival of heat in a number of eastern regions of the country, the overwhelming storage surplus is not just going to disappear overnight. “I look at the giant 716 Bcf year-on-five-year storage surplus and I realize that we would be doing pretty well if we could trim that consistently by 10 Bcf per week,” Evans hypothesized. “The only problem with that theory is it would take 72 weeks — or roughly a year and a half — just to reach a deficit to the five-year average. It’s pretty unlikely that we will take 10 Bcf off the surplus consistently for a year and a half, so bringing the storage situation into check is definitely a long-term situation. It would take significant intervention by Mother Nature or severe curtailment on the part of the producers to shorten that timeframe.”

Looking at the current natural gas futures market, Evans said the larger trend still appears to be downward. “It would be nice to say that we are at a sustainable value as far as the nearby prices are concerned, but I don’t think we are there either,” he said. “There could still be dollars of risk to the downside on the nearby months, and if you look at where winter is trading, there is even more risk to the downside in that part of the curve. Is $10 rock bottom for next winter? Not if there is no change between now and then.”

Natural gas traders will be keeping an eye on crude and products trading for any sympathetic move by natural gas. OPEC will hold its first meeting on Thursday since oil prices struck record levels above $75 a barrel. The meeting is hosted by petro malcontent Venezuelan President Hugo Chavez, who has recently been tightening his grip on his nation’s oil operations and encouraging neighboring countries to do the same. The thinking is that OPEC will leave production quotas unchanged at 28 million barrels a day, although Venezuela has been pushing for a cut that could bring prices back to the all-time high of late April. Surging or sinking oil prices resulting from OPEC action or inaction could resonate through natural gas markets, traders say.

Weather bulls may be able to emerge from their recent funk as warm, humid weather makes an entrance into key eastern energy markets this week. AccuWeather predicts that a slow-moving front will plod toward the eatern region, but before it arrives, a steady southerly flow will cause humidity to keep building. “Along with this humidity will come some afternoon and evening thunderstorms, not unlike what we commonly see during the peak warmth of summer,” it predicted. The front is expected to sweep through the region and push the humidity offshore by the time the weekend arrives, however.

Figures from the National Weather Service show not only warm temperatures arriving in important energy markets but also at a faster rate than normal. For the week ended June 3, the populous states of New York, New Jersey and Pennsylvania are forecast to receive 28 cooling degree days (CDD), or 16 more than normal. The industrialized Midwest states of Ohio, Indiana, Illinois, Wisconsin and Michigan are expected to stew in 50 CDD, or 29 more than normal.

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