Natural gas futures drew to a mixed close Tuesday as traders cited little in the way of new fundamental data and noted the rolling of short positions into more deferred contract months. At the close November futures rose 2.8 cents to $3.629 and December fell 1.8 cents to $3.992. November crude oil lost 54 cents to $81.67/bbl.
“This market’s story remains largely unchanged as the grinding process to the downside continues to reflect some accelerated evaporation of storm premium with the hurricane season approaching completion amidst only minor disruptions to the GOM infrastructure in recent months,” said Jim Ritterbusch of Ritterbusch and Associates. He added that Hurricane Paula was getting attention, but “the market has been reluctant to advance off of this item. Mild temps are also a bearish consideration. Although more seasonal patterns are expected across much of the country beginning [Wednesday], unusually mild trends during the first half of this week would appear to favor another above-normal storage build in next week’s data,” he said in an afternoon note to clients.
Hurricane Paula continues to get stronger. In its 1:45 EDT report the National Hurricane Center (NHC) reported it was located 140 miles south-southeast of Cozumel, Mexico, and was a Category 3 hurricane holding 100 mph winds. NHC said Paula was heading to the north-northwest at 10 mph and if NHC projections are correct, Paula could enter the eastern Gulf of Mexico.
Although November futures slipped below $3.60 technical support Tuesday, not all traders are convinced that lower prices are in play. Peter Beutel of Cameron Hanover wonders if price excursions below support are “just a first foray into new low territory. We tend to be in the camp that believes we have a bear trap, based on oversold pressures, price levels, support levels and the inescapable truth that the northern winter is not all that far away — especially for futures traders.”
Beutel argues that cold weather is imminent. “It has been unseasonably cold, especially at night, in southern New England and the North- Northeast this early autumn, but we are not yet sure we have returned to a colder-than-normal pattern. It is starting to feel that way, after having ended a year-and-a-half of colder-than-normal readings last March. From March through July, temperatures were substantially warmer than normal. Since August they have been slowly becoming colder and colder. By early or mid-November, we should have a clear idea of what kind of temperature pattern we will have going into winter.”
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