June natural gas futures rose in moderate activity Tuesday as traders focused on funds rolling short positions prior to Wednesday’s June contract expiration as well as forecasts of hot weather for eastern markets.

June natural gas futures rose 3.4 cents to $4.051 and July added 3.9 cents to $4.114. July crude oil fell $1.46 to $68.75/bbl, and the Dow Jones Industrial Average recovered from an earlier plunge to settle down 22 points to 10,043.

Traders noted that natural gas markets failed to respond to the financial turbulence engulfing other markets. “Natural gas is the lone wolf of positive commodities,” said a New York floor trader. He added that funds were rolling their June short positions into July, and “July TAS [trade at settlement] was well bid on the close. It looked like some shorts were leaving the market.”

Weather was also in play. “New York is forecast to be 15 degrees above normal and humid. I think that supported the market as well. Also the [earlier] great contangos in the market have been taken out, October-November, October-December, and October-January, and I think that is helping the market.”

Natural gas bulls are frustrated. “I’m thinking natural gas prices aren’t going to be at these levels forever, but I don’t know which way it’s going to go. I’d like to think that all the normal sellers have already sold natural gas and that they are waiting for a reason to buy, but the market hasn’t gone anywhere,” said an Oklahoma City broker.

The broker uses a moving average model to help guide him in his trading decisions, and “I would get interested in buying if prices settled above $4.60, but right now I would be selling rallies up to $4.40,” he said.

Analysts see the recent lackluster trading as a sign that investors are awaiting the raft of economic reports due this week. “It is difficult to tell which was the more ‘dominant’ factor [Monday] — a lack of fresh selling interest at comparatively lower levels or a lack of new buying in the face of abundant supplies, increasing numbers of drilling rigs starting up, poor industrial demand and an uncertain business climate ahead,” said Peter Beutel, president of Cameron Hanover.

He added that “it might not be an overstatement to suggest that this week’s economic data could spell the difference between a recovery this year and a double-dip recession. If all the data lines up on one side of the ledger, which is unlikely, it will make a difference in traders’ thinking moving forward. “That is what we think yesterday’s relatively tight trading range and minor movement were telling us. Traders are afraid to buy because a raft of poor economic news could submerge the bow of the boat and take on water. But traders were equally reluctant to get ahead of events on the short side,” he said in a note to clients.

The first report out of the gate was the 10 a.m. EDT release Tuesday of consumer confidence data from The Conference Board. It came in at a stout 63.3, surpassing the April index of 57.9, and well ahead of expectations centered around 59.0. Rising consumer confidence is not likely to immediately affect the natural gas market but would indicate an improving economy and buoy trader confidence.

On Wednesday traders will be looking at durable goods, and new home sales. Thursday it’s the report on first quarter gross domestic product, and Friday reports include personal income, the Chicago Purchasing Manager’s Index, and consumer sentiment.

With such a plethora of data available Beutel is hopeful natural gas and energy markets will at least get some clear signals. “The odds suggest that nothing will be settled by this week’s data, that it will still have one foot in a better economy and another foot in the slippery slope of European sovereign debt and the stock market correction. But if the data aligns one way or another, a formidable set of conjunctions could give a solid bullish or bearish reading that could align the stars for a clear prognostication.”

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