Even with crude futures breaking back above $70/bbl on Tuesday, June natural gas futures managed to resist the temptation to follow. For the second consecutive session, prompt month natural gas traded within a slim range before setting its sights lower. After hobbling between $6.560 and $6.720, June natural gas closed at $6.581, down 11.5 cents on the day and 19.4 cents lower for the week to date.

June crude climbed 92 cents on Tuesday to settle at $70.69/bbl, which once again widened its spread over natural gas. Converting barrels to MMBtus on Tuesday revealed that June crude settled at roughly $11.782/MMBtu, a $5.201 premium to natural gas. June heating oil closed Tuesday 4.06 cents higher at $1.9951/gallon, the equivalent of $14.447/MMBtu, or $7.866 above June natural gas.

Natural gas traders continue to sit tight and wait for a more accurate picture of the summer’s temperature outlook as well as a better idea of just how active the hurricane season — which begins on June 1 — is going to be.

“Nothing really new to report, other than the fact that crude is still toying with $70 and natural gas continues to struggle in the mid/high $6 range,” said Jay Levine, a broker with enerjay LLC. “Same old, same old — [natural gas is] still struggling and has floated back into a previous support zone, that being this $6.70/$6.50 area, but would still leave room for [one] further flushing of length and support sub-$6.40, down to $6.30, then closer to $6. I’d like to see June natural gas trade through $6.75 again, and would still consider using that as my initial pivot area (worked last week for a good trade) — up to resistance in that $7-$7.10 area — and the next time past $7 suggests quick runs to $7.75 and $8.50.”

Some traders are still keying off of a recent hurricane forecast, which sees only a small chance of hurricane damage to Louisiana infrastructure. A top weather forecaster predicted an active hurricane season, but suggested that the Texas Gulf Coast and portions of the East Coast are the most vulnerable. AccuWeather’s Joe Bastardi spoke last week in Houston to energy executives and predicted one tropical storm and five hurricanes, three of which, he said, would be Category 3 or higher. He said that the refinery laden Texas Gulf Coast and the Atlantic seaboard, primarily the Carolinas and Long Island, were most susceptible. The Louisiana coastline, parts of which were completely destroyed by last year’s onslaught, has a moderate risk of suffering another direct hit, Bastardi said.

Warmer waters and more suitable atmospheric conditions similar to those in place during previous major storms make the Texas coast and the East Coast more vulnerable. Last year, the Texas coast was mostly spared, but a hit this year could be devastating to the nation’s energy supplies. Texas is home to 26 refineries that account for one-fourth of the nation’s refining capacity.

Futures technicians see the market as rangebound but hint at a tendency toward lower prices. “The last few days of trading reveals an alternation of failed attempts to rally and failed attempts to sell off,” said Walter Zimmerman of United Energy. “The seasonal cycle does suggests the greater risk is to the downside.”

Large speculators may concur. On Friday, the Commodity Futures Trading Commission reported that as of May 2, noncommercials held a net short natural gas futures position of 26,582 (futures only) contracts, up from the 13,440 net short held a week earlier.

Prior to Tuesday’s session, Phil Flynn of Alaron suggested buying June natural gas at $6.600 with a stop loss order at $6.500.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.