Expiring September natural gas futures managed a modest gain Wednesday but were well off the Gustav-induced highs of the session. Traders lamented that the uncertainties of Gustav’s path and the direction of natural gas futures were joined at the hip, but suggested that the near-term trend was higher.

At the close of trading the September contract was up 11.6 cents to settle at $8.394 after trading as high as $8.847 in Globex trading and October futures added 22.1 cents to $8.608. October crude oil rose $1.88 to $118.15/bbl.

At 2 p.m. EDT the National Hurricane Center reported that Gustav was located 140 miles west of Port-au-Prince, Haiti and was moving to the west at 5 mph. Maximum sustained winds were 60 mph, and “slow strengthening” was forecast after the storm disengaged itself from Hispaniola.

Traders were not expecting the market to trade the way it did. “You come in 50 cents better on the open and then the market slides down to nearly unchanged and rallies on the close,” said a New York floor trader. He added that with an active storm approaching the Gulf he didn’t expect much selling. “October futures never traded much below $8.50, and I think the market sticks its head up over the next couple of days. I look for the October contract to trade up to $9.25 to $9.40 over the next couple of days and then we’ll see where the storm is headed. After it blows through maybe we’ll come right back off,” he said.

Of 24 computer models tracked by the AccuWeather.com Automated Tropical Cyclone Forecast (ATCF) five show Gustav heading towards the Yucatan, two show a track towards the Florida Panhandle, one heads out into the Atlantic, and 12 show a path towards the Texas-Louisiana coast.

The driving determinant of Gustav’s direction appears to be a ridge of high pressure off the Florida coast. For the moment Gustav has to navigate the southern flank of that ridge, but if the ridge moves out to the east, it could leave Florida and the eastern Gulf more unprotected.

Hurricane forecaster Joe Bastardi calls Gustav a “scary situation.” He says, “It’s a pick-your-poison situation, and I would be very surprised if this was not at least a Category Three hit on the Texas or Louisiana coast. The early 1900s, the Ritas, the Carlas come to mind as the top end here. Not trying to scare people, but trying to balance letting people know what I think so they can at least look at this as a possibility,” he said in a Tuesday blog.

Bastardi is looking at a landfall somewhere on the upper Gulf Coast of Texas, possibly near Houston. “Hopefully Houston does not have a problem. If not them, someone else, though, as Gustav means business in the Gulf. A disruptive, perhaps destructive Labor Day beast that will burden looks to be in the making,” he added.

Bastardi’s “top end” were indeed doozies. The Galveston Hurricane of 1900 was the worst weather disaster the country has ever faced. The storm landed south of Galveston, TX, as a Category Four hurricane and with little in the way of modern communication an estimated 8,000 perished. Hurricane Rita was the third Category Five storm of the deadly 2005 season. It landed just east of the Sabine Pass area on the coastal border of Texas and Louisiana at Category Three strength, and for a while it looked as though it would hit Houston. Hurricane Carla hit the Texas Gulf Coast in 1961 as a Category Four hurricane near Port O’Connor, TX. Prior to landfall winds had reached 175 mph, and the storm surge climbed to 22 feet.

As if the storm were not enough to keep traders busy, the Thursday 10:35 a.m. EDT release of inventory figures should provide grist for supply bears. A Reuters survey of 22 analysts showed an average expected increase of 84 Bcf, well ahead of last year’s 38 Bcf and the five-year average of 57 Bcf. Ritterbusch and Associates is expecting a build of 79 Bcf.

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