Buoyed by renewed tropical storm concerns and in sympathy with higher crude oil prices, natural gas futures rebounded modestly Wednesday as traders covered shorts and added to their length ahead of the release of fresh storage data Thursday. However, the day’s gains were cast in doubt by a late sell-off following the market’s failure remain above Friday’s $3.25 low. At $3.193 the October contract was nearly a dime off its $3.29 high, but still up 6.1 for the session. Crude gained 48 cents to close at $28.27. Estimated volume in the gas pit was heavy with an estimated 90,435 contracts changing hands.

As of press time last night, Tropical Storm Edouard, packing maximum sustained winds of 40 mph, was bearing down on the east coast of Florida. The storm was moving toward the west-southwest at a speed of 7 mph and this general motion, with some decrease in speed was expected for the next 24 hours, the National Hurricane Center said. Looking ahead, market watchers are keeping tabs on this westerly direction, realizing the storm could reform and re-strengthen in the warm waters of the Gulf of Mexico.

And while the NHC calculated only a 13% chance that the center of Tropical Storm Edouard would pass within 65 nautical miles of Mobile, AL, private forecasters were not willing to overlook the threat. “Our biggest concern over the weekend and reiterated [Tuesday] was the potential for Edouard to re-emerge in the northeast Gulf of Mexico after traversing Florida, wrote Weather2000 in a note to customers. “With minimal topographical barriers (i.e. mountains) and a relatively short distance to travel, some structure of Edouard should survive. By the end of the week and into the weekend, we could be dealing with a storm located south of the Florida Panhandle.”

Also of concern to forecasters and traders Wednesday was existence of “disturbed weather” over the northern and northwestern Gulf of Mexico. As of press time Wednesday, the NHC had sent aircraft to monitor the low pressure system. The formation of a tropical depression is possible within the next day or two, the NHC said.

However, it is likely that all the talk about cyclonic storms will be put on hold Thursday morning when the Energy Information Administration releases it latest supply data. For Kyle Cooper of Salomon Smith Barney, last week’s report will feature an injection between 63 and 73 Bcf, which if realized would fall between last week’s 59 Bcf build and last year’s 76 Bcf refill.

In daily technicals, Jay Levine of New Hampshire-based Advest Inc. is cautiously bullish at these levels and would suggest traders look to add to their longs down at these levels. He would re-evaluate this outlook should the market break beneath support at $3.03.

Trading at NYMEX was halted yesterday from about 11 to 11:30 a.m. EDT yesterday for a planned fire drill that the exchange must perform once every year. During the stoppage, broker-assisted and online over-the-counter trading stepped in and boosted the market modestly higher. Upon the exchange reopening, the October contract moved 3 cents higher in five minutes.

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