Supportive

Natural gas bulls were likely salivating last week as MDA EarthSat Energy Weather announced nothing but supportive price news for summer 2007. The Rockville, MD-based forecasting firm said it expects this summer to be “warmer than normal,” adding that it also expects an “active” Atlantic hurricane season with the Gulf of Mexico and its land borders under increased threat.

Natural gas bulls were likely salivating this week as MDA EarthSat Energy Weather announced nothing but supportive price news for summer 2007. The Rockville, MD-based forecasting firm said it expects this summer to be “warmer than normal,” adding that it also expects an “active” Atlantic hurricane season with the Gulf of Mexico and its land borders under increased threat.

Although weather fundamentals were growing a bit more supportive of cash gas going into the weekend, prices still fell at all points Friday following seemingly unlikely strength earlier in the week when moderate conditions were more widespread. Overall heating demand that was still on the mild side for the most part and the usual drop of industrial load during a weekend combined to halt the upward price trends that had run through Thursday.

Futures strength, which had largely been responsible for cash quotes rising most of last week, had its supportive ability fail Friday as the physical market took double-digit dives at all points. Cash traders also had to contend with a weekend warm-up in the Midwest eliminating some heating load at the same time that falling temperatures were reducing cooling load in the western end of the South.

Bullied by follow-through buying on the heels of last week’s supportive storage release, the natural gas futures market opened higher Friday and rose quickly to test key resistance near the $6 mark. However, the gains were short-lived as market-watchers were hit with weather forecasts confirming the belief that the second half of the month would be much warmer than the first half.

After tumbling beneath key support, the natural gas futures market broke to new two month lows late Thursday morning as traders chose to ignore a seemingly bullish gas storage report (featuring a 236 Bcf withdrawal). However, prices rebounded in the afternoon, suggesting a short-term bottom may be in place. The May contract finished at $5.40, down 25.4 cents for the session, but up an impressive 15 cents above its earlier low.

Bullied by the one-two combination of cooler weather forecasts and speculative fund buying, the natural gas futures market accelerated higher Tuesday in a session marked by light activity and choppy trading action.

After checking lower in the moments following the 10:30 a.m. ET release of fresh storage data (70 Bcf injection), the natural gas futures market worked its way higher late Thursday morning and afternoon as buyers sided with the seasonal tendency for prices to climb during the month of September. As it turns out, that buying was enough to withstand two distinct selling surges Thursday morning as technical traders attempted to induce a move below key support levels at $4.55 and $4.44. October finished the session at $4.81, up 11.6 cents for the session.

Buoyed by market psychology and supportive technicals, the natural gas futures market continued higher Tuesday as buyers spent another session quietly consolidating last week’s significant sell-off. The September contract received the biggest buying boost, climbing off its $4.87 afternoon low to rally in the last hour of trading. It finished at $4.964, up 8.1 cents for the session. At 53,447, estimated volume signified another light trading session at Nymex.