After regrouping the previous two sessions as August natural gas futures recorded a gain of 3.3 cents and a drop of 6 cents, respectively, the bears were on the prowl again on Tuesday as the prompt-month contract had 44.3 cents sliced from its value. The contract dipped below $10 on Tuesday before closing at $10.067 while August crude also got back to its recent bearish ways by dropping $3.09 to finish at $127.95/bbl.

Significant heat in the Northeast nor a storm in the Gulf of Mexico could turn the tide of the market as Tropical Storm Dolly, which was upgraded to a Category 1 hurricane after the regular trading session’s close, remained on a southern course through the Gulf of Mexico that was seen as nonthreatening to energy infrastructure (see related story).

“While the Minerals Management Service is reporting some offshore natural gas shut-ins, it is only a couple hundred million cubic feet, so it is not that significant in the broader supply picture,” said Steve Blair, a broker with Rafferty Technical Research in New York.

The broker noted that the significant drop in value over the last few weeks has left prices in a whole different zip code. “A couple of coworkers I talked to were joking that it felt kind of funny writing a four-digit price on their tickets on Tuesday.” As for the reason for the steep drop, Blair said he doesn’t see “anything particular” going on. “It depends on how you want to look at it. Some pin it on us following crude or renewed strength in the dollar. Others say it is the lack of energy industry-impacting tropical disturbances or that it is based on the comfortable storage situation.

“For the most part the moves lower have not been insignificant. Fifty cents this Tuesday and 80 cents last Thursday, so the move lower does not appear to be running out of steam. From a technical perspective, we have support at $9.900. Below that we’re looking at $9.600 to $9.620. I think we might be able to do it because this market is currently taking no prisoners. Friday’s Commitments of Traders report also revealed a number of new shorts in the market from the noncommercials, or funds.”

However, Blair noted that the market climate could change in an instant. “If we do get a storm that does head into the right part of the Gulf, then the market will reverse course in a hurry. The whole question is, where is the market going to be if and when that happens? That is your key question.”

Outer bands of Dolly were expected to bring showers and heavy thunderstorms to the southern coast of Texas into Wednesday, according to The forecasting firm noted that Dolly was expected to make landfall, possibly as a Category 2 hurricane, early Wednesday morning.

“The rough surf should not impact U.S. oil and natural gas operations, since the majority of the offshore oil platforms are in the central Gulf,” said Meghan Evans, a meteorologist with “The Texas citrus crop could be devastated. Five to 10 inches of rain may fall in South Texas, with locally higher amounts. Widespread flooding could threaten lives, property and agriculture in South Texas.”

Some market experts were predicting the test of $10 even before Tuesday’s regular session. “The August contract’s early test of expected support at the $10.33 level suggests another weak session that could easily be followed by a run at the round number magnet of $10 as this week proceeds,” Jim Ritterbusch of Ritterbusch and Associates said Tuesday morning.

Other traders, though bullish, said they would prefer to establish a long position from lower levels. “Buy August natural gas at $9.900 — stop $9.700,” Phil Flynn of Alaron in Chicago advised Tuesday morning.

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