Seemingly unaffected by the significant strength in the petroleum sector, natural gas futures on Monday pushed lower as the tropics remained quiet and temperatures began to moderate in the U.S. After trading below the psychological $7 level in Sunday’s overnight session, September natural gas traded within a slim 21-cent range during Monday’s regular session before settling at $6.907, down 33.9 cents on the day.

Monday’s action stood in stark contrast to the previous Monday, when the September contract jumped $1.027 to close at $8.211 on Tropical Storm Chris fears. After being downgraded to a tropical depression at midweek, Chris fizzled and completely evaporated over the weekend.

The real moving and shaking this Monday was occurring in the petroleum trading rings, where futures prices jumped on reports from BP that “severe corrosion” forced the company to begin the first shutdown ever in Alaska’s Prudhoe Bay — the biggest oilfield in the United States. On the news, September crude jumped $2.22 to close at $76.98/bbl, while September unleaded gasoline climbed 2.01 cents to close at $2.2516/gallon.

That network of pipelines supplies approximately 8% of the nation’s domestic oil production. During a recent inspection, the company discovered one leak and numerous instances of thinning pipeline walls. BP said shutting down the field will take days to complete and that over time, these actions will reduce Alaska North Slope oil production by an estimated 400,000 bbl/d.

“We regret that it is necessary to take this action and we apologize to the nation and the state of Alaska for the adverse impacts it will cause,” said Bob Malone, BP America chairman. “However, the discovery of this leak and the unexpected results of this most recent smart pig run have called into question the condition of the oil transit lines at Prudhoe Bay. We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment.”

Traders were quick to point out the disconnect between natural gas and petroleum products. “Part of the reason for the relief or failure in natural gas prices is the quick hysteria, which hit the market immediately following that surprise storage figure two reports back, dissipating,” said Jay Levine, a broker with enerjay LLC. “Natural gas just doesn’t have the concerns its energy brethren has, as witnessed by a major oil producer shutting down corroded/corroding pipes in Prudhoe Bay.

“Heat and the threat of hurricanes came and went,” Levine added. “That’s oversimplifying it but it’s likely going to take more than just heat — extreme and wide-spread though it has been — to further establish a base for natural gas from which to launch and, since the heart of the hurricane season is upon us, it’s likely to still play a major role even as summer ‘winds down.'”

Looking at support and resistance lines, Levine said first resistance basis September resides on either side of $7 — give or take a nickel. That is followed by $7.25 or possibly up to $7.55-$7.65, then on to $8-$8.10 followed by $9+. As far as support, Levine said the Sunday overnight low of $6.76 “feels about right, but since the market is on the defensive, I might lower that a bit — allowing for a further shake-out — and something sub-$6.70, down to $6.65…or $6.50…followed by either side of $6.25.”

Monitoring Sunday’s after-hours trading session, Commercial Brokerage Corp.’s Tom Saal said the “keyword” in this market right now is “volatility.” He urged clients to monitor the value areas. “There are untested value areas all over the place,” he pointed out.

Saal said he would first look for September to test the $6.747 to $6.864 value area, followed by the $6.492 to $6.658 range. The broker said he then expects a swing to the upside for a test of the $7.230 to $7.320 area followed by a test of the $7.760 to $8.305 range.

Temperatures were expected to continue to moderate in a number of regions around the country, giving people a break from the dominant heat waves of the last three weeks. According to the National Weather Service in its latest six-to-10-day outlook, while the central portion of the U.S. is still expected to see above normal temperatures, the entire West and East coasts are expected to experience normal to below-normal temperatures from Aug. 12-16.

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