Buoyed by warmer than normal temperatures as well as support from petroleum futures, July natural gas futures on Monday ignored the fizzled impact of Tropical Storm Arlene to climb higher once again, notching a high of $7.28 before settling at $7.26, up 32.8 cents on the session.

Thanks to refinery capacity concerns, July crude and July heating oil also had standout days, with crude climbing $2.08 to settle at $55.62/bbl. Heating oil closed at $1.6631/gallon, up 5.57 cents.

“Natural gas futures is back up over $7.00 with some oomph, so we will see if it is able to follow through here. There is no question it has been warm here,” said a Washington, DC-based broker. “It’s been hot everywhere. After settling back off of that $7.43 high late last week on the July contract, here we go again it looks like.”

The National Weather Service said in its eight-to-14-day outlook on Monday that the entire central portion of the U.S. along with the Northeast is expected to experience above average temperatures for this time of the year.

The broker said it will be interesting to see this week’s storage report for natural gas injected in the week ended June 10. Many expect that with the hotter weather last week, the injection could be smaller than normal, which would boost the bulls’ argument. The issue is going to be how the country fared with the high natural gas demand last week, the broker noted.

“Overall, this market looks like it is in an up phase and is just following through,” she added. “Quite frankly, all of the energies look like they are in an up phase. You know what they say, ‘If you can’t beat em, join them.’ I don’t think there is any one news story responsible for the move. We are still at the beginning of summer and there are still a lot of cooling degree days to rack up potentially, which is the big unknown.”

IFR Energy Services’ Tim Evans said Monday that the blitz in energies was spurred by the 5.57-cent spike in heating oil prices, a result of refinery capacity concerns. He noted that the climb carried July heating oil to within 40 points of its all-time high set on April 4.

“Natural gas was well supported by the gains in petroleum and some short-covering by Friday’s sellers, despite the relatively easy recovery of production in the Gulf of Mexico in the wake of Tropical Storm Arlene,” Evans said.

It also appeared that noncommercial traders were sprouting horns a bit last week in support of the bullish case. On Friday the Commodity Futures Trading Commission reported that as of June 7, noncommercials had decreased their holding of short positions to 32,957 (futures only) contracts. This is a decrease of 12,377 contracts from the week earlier.

Despite following roughly the same course as Hurricane Ivan in 2004, Tropical Storm Arlene only grazed the oil and gas industry in the Gulf of Mexico over the weekend. By the end of the day Monday, almost all of the shut-in production was expected to be back online (see related story).

In Friday’s trading it had looked like a classic case of market over anticipation as traders reacted to indications that Arlene might be upgraded to a hurricane. “There was one ‘spook’ during the day when traders thought the tropical storm would be upgraded, and after that it became a case of ‘buy the rumor, sell the fact’ and traders sold,” a New York floor trader observed.

While Arlene is now in past tense, hurricane season still has several months left. The National Hurricane Center said Monday it is monitoring a new low pressure system in the central Caribbean.

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