Near-month gas futures came out of the gate relatively strong Monday and posted their daily high of $6.780 just after 1 p.m., but the contract succumbed to hard selling pressure immediately after the daily high and proceeded to drop more than 25 cents in just a few minutes of trading. September ended the day down 10.7 cents at $6.624. October was off 12.1 cents to $6.730, and December lost a quarter to end at $10.170.

While temperatures are expected to remain slightly above normal, which should put a little continuing downward pressure on storage injections, the hurricane season…well, what hurricane season? A few minor disturbances bear watching, but with only a week or two from the peak of the season there’s not much out there yet to spark concerns.

“We certainly came back down and took out the overnight low by a nickel, at least in the October futures,” said Citibank futures analyst Tim Evans. “About the same time [that natural gas fell sharply] October crude was down to $72.40, but then came back up. The market seems to be disappointed most because we don’t have that same obviously bullish combination we had in July — triple digit temperatures and the possibility of a tropical storm. We are squinting at the radar screen so hard trying to see a hurricane develop that we are now looking at patterns in central Africa instead of the Atlantic. But there’s nothing that says if we don’t have a hurricane by Aug. 30 we won’t have any.

“The idea that the market remains vulnerable to the downside because we haven’t had a hurricane yet is kind of a false bearish fundamental,” he said. “But if you look at where we are, $6.50 is not a magic level. We are still holding well above the $5.52 low from late July and the $5.39 from early July so we could pull back a little further and still not really be in clear bear market territory as far as making new lows are concerned.”

Evans said Monday’s trading seemed more like a “half-hearted attempt” at pushing the market lower. “I don’t see a lot of trading volume behind it. I don’t see the decline as being irreversible.” With the supportive storage trend — 13 weeks in which the surplus compared to historical levels has declined — and with above normal temperatures in the forecast, it is unlikely that futures will be able to move much lower, he said.

The National Weather Service is forecasting 75 cooling degree days this week, which is 14 more than normal and five more than the same week last year. Meanwhile, the six-to-10-day forecast shows above normal temperatures across the majority of the nation. That should continue to limit storage injections.

Consultant Stephen Smith said he’s expecting a 53 Bcf injection in this week’s storage report. That would compare to 60 Bcf during the week ending Aug. 19 last year. Smith said he’s projecting that working gas levels will ending the injection season on Nov. 3 at 3,474 Bcf, or about 243 Bcf above levels at the end of the season last year.

“I continue to ramp down my guess on where we are going to be at the end of the injection season,” Evans said. “I’ve taken 3.5 Tcf off the table, and I’m thinking 3.4 Tcf or maybe less. It’s still an excess but not much of one.”

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