Despite mild-temperature forecasts, the natural gas futures market rebounded Monday as traders bid prices higher on concerns over increased tropical activity in the Atlantic Ocean and Gulf of Mexico. At $5.70 the September contract gapped higher at the opening bell on its way to an early high at $5.75. The contract eased slightly in the late morning hours and then stabilized in quiet afternoon trading. September closed at $5.693, up 10.5 cents for the session.

As of Monday evening, the National Hurricane Center (NHC) had scheduled reconnaissance aircraft to investigate storms in the Caribbean Sea and the Gulf of Mexico. With few firm details on either of the two developing systems — Topical Storm Bonnie and Tropical Depression Three — traders Monday were erring on the bullish side as they bid the market higher early in the session. “It was a classic case of buy the rumor,” a trader told NGI. “You come back in from the weekend and there is talk of not one but two storms. It is only natural to want to be long,” he said.

Tropical Storm Bonnie on Monday was located about 410 miles south of the mouth of the Mississippi River, moving northwest at 12 mph with sustained winds of 45 mph. The NHC warned interests in the north central and northeastern Gulf of Mexico to keep a close watch on the storm over the next few days. Tropical Depression Three on Monday was located about 30 miles southwest of Grenada traveling west at 22 mph with winds at 35 mph.

However, it may take more than some stormy tropical weather to keep prices at these levels, sources agree. The rest of the fundamental outlook remains undeniably bearish. “Cooling degree accumulations for last week were almost identical to the prior period, suggesting we may see 75-85 Bcf in net injections in Thursday’s report, well above the 54 Bcf five-year average,” wrote Tim Evans of New York-based IFR Pegasus in a note to customers Monday.

Thomas Driscoll of Lehman Brothers in New York also calls for a hefty 85 Bcf injection and notes that this would increase both the year-on-year and year-over-five-year storage surpluses. “If this [rate of injection is] to continue over the remaining 13 weeks of the refill season, storage would reach our targeted 3,100 Bcf by the end of October,” Driscoll wrote in a research note to clients Monday.

Looking at the rest of this week, the latest round of temperature forecasts offer bulls little hope. “[Degree days cooling] accumulations for the coming week are even lower, suggesting yet another bearish storage report to follow,” Evans continued. “Natural gas may have stabilized for now, but they look like they are still at risk for further declines over the intermediate term.”

However, Craig Coberly maintains a bullish outlook based on the market’s ability to move near, but not break beneath a key support line last week. “Trading above $5.75 with or without first reaching the $5.53-55 objective will say the decline is complete. If [and] when this occurs, the intermediate-term trend will be higher and a move into the $7.00 area will be likely over the next few months.”

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