The futures market shrugged off another bearish AGA storagereport and quietly traded higher at Nymex Thursday. After testingsupport in the $1.88-89 span early, the September contractrebounded to the mid-$1.90s where it remained in afternoon trade.The prompt month settled at $1.953, up 3.6 cents on the day.

Despite the rise in prices, many market participants feel thatthe upward correction has run its course, and fundamentals (led bythe 481 Bcf year-on-year storage surplus), not technicals, willcontinue to hold the market down.

However, a gulf coast trader pointed to the most fundamentalfactors – cash prices and weather – as possible sources of support.”We saw the profile of sellers in the cash market change today.There is a large segment of the market that is long index gas from[Aug. 1]. When prices were above index [Wednesday], they weresellers. But when prices dipped below index [Thursday], they wereputting gas into the ground and marking to market against thewinter so as not show a loss on their books. That causes gas tobecome a bit more scarce on a dip in prices. Plus, if we get somehurricane-hype buying ahead of the weekend, then we could be in fora test of the double top formation at $2.045-050.”

The Pegasus Econometric Group of New York remains bearish onfundamentals, but admitted, “A failed double top is normally areliable buy signal, and we would look for a quick move to $2.12,and eventually $2.20 on such a display of technical judo.”

Support still exists at the gap on the daily charts at the$1.88-89 level for September, a chartist advised. The Thursdayevening Access trading session last printed a $1.990 for September,up an additional 3.7 cents.

Tropical Storm Bonnie became the second named storm in theAtlantic hurricane season yesterday afternoon when it was upgradedfrom tropical depression status, the National Weather Service (NWS)said. Most models predict Bonnie will veer right from its currentcourse, which is slight north of due west. However, one modelfavors the storm to continue on its path toward the Virgin Islandsand Puerto Rico where Tropical storm warnings and watches have beenissued. The long-term forecast indicated this system could gainminimum hurricane strength (sustained winds of 74 mph) by Sunday.

Additionally, there is another large tropical wave locatedwest-southwest of the Cape Verde Islands. The NWS reportsconditions are favorable for its development during the next coupleof days.

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