Stemming a two-week, $1.25 price slide, natural gas futures rebounded last week amid neutral to bullish fundamental factors and increasing constructive technical clues. After carving out a fresh 19-month prompt month low by trading down to $2.255 earlier in the week, the October contract finished strongly at $2.50 Friday, up 6 cents for the session and just beneath its $2.53 high for the week.

For many traders polled by NGI, last week’s price gains were more a function of a lack of selling than strong buying interest. “The smaller-than-expected storage injection has pushed the big sellers to the sidelines,” a broker said. “We saw steady end-user buying on Friday. That, coupled with a little storm paranoia was enough to lift us higher into the close.”

As of press time Friday, the National Hurricane Center was monitoring two separate tropical waves in the Atlantic that possess the necessary conditions for strengthening into tropical depressions.

Looking ahead, traders anticipate a busy trading week. In addition to the possibility that one or both of the waves will strengthen into a tropical storm or hurricane, market watchers are also eager to learn what forecasters are predicting for this winter.

While admitting that their September forecast represents a subtle change warmer, Chris Hyde, of Maryland-based EarthSat Corp., maintains that the temperatures this winter, especially in the Midwest, will be below-normal. “Compared to our August report, [the September report] will be bumped up a half of a degree to a whole degree warmer. The reason being is that in our August model run, the thinking was that the phase type would flirt a little more with a weak El Nino,” he said. A weak El Nino, he continued, is your best possible chance for cold air transport. Now, it is looking a little more like it is sticking around the neutral phase type, and because of that it should be a little bit warmer this winter [than previously forecast]. Still, it should come in colder than last winter-November to March as a whole.”

In daily technicals, October has good support at last week’s $2.25 lows, according to George Leide of New York-based Rafferty and Associates. On the upside, he looks for the market to retest resistance in the $2.52-53 area. A break of that level would almost certainly lead to a run-up to fill in the chart gap in the $2.610-725 area, he reasoned.

“This market is in the process of making a nice bottoming formation because the market has not broken beneath the $2.35 low seen just prior to the double spike low in the $2.25-26 area last week,” Leide said. “If we can maintain above $2.35, we may have already seen the market’s lows.”

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