Trading within a fairly limited range Tuesday, July natural gas futures came out of the holiday weekend a little bit groggy. Despite notching a low of $6.26 in morning trade, the prompt month rebounded to settle at $6.379, less than 1 cent higher than Friday’s settle and just 1.1 cents off of the high on Tuesday.

It was lackadaisical trading day for petroleum futures as well, with July crude gaining 12 cents to settle at $51.97/bbl, while July heating oil and July unleaded gasoline each strayed less than 1 cent from Friday’s closes.

“In the morning, natural gas futures looked like they really wanted to break down again, but they gave it back and really looked almost like a carbon copy of Friday in terms of the day’s range and where we closed,” said a Washington, DC-based broker.

He noted that traders might have extended their Memorial Day holiday weekend a little bit as things were pretty quiet Tuesday. “Trading was awfully thin,” he said. “We didn’t write a single natural gas order all day. There was nothing really exciting in terms of natural gas news out there.”

As for whether the market is currently witnessing a shift in the trend to the upside, the broker said he wouldn’t go that far yet. “We still have not gotten over the high point from Thursday when we had the big sell-off,” he said. “On Friday and on Tuesday we got right up to that $6.39 to $6.40 range, but we haven’t exceeded it. I think it is too early to tell about a change in trends. It is not there yet to say that this is a bottom. However, I don’t know how much further it has to go given the time of year.”

The broker pointed out that it also appears that the funds don’t see a change in the trend yet, noting that they continue to add to their net-short positions

The Commodity Futures Trading Commission reported that as of May 24, noncommercials held 45,023 net short positions futures. A week earlier, noncommercials were net short 35,449 contracts. The effect on prices was predictable. As of May 17, June futures closed at $6.476, but on May 24, June settled at $6.349.

Providing some support for bulls Tuesday was the latest outlook on this year’s hurricane season from Colorado State University’s (CSU) Tropical Meteorology Project. According to CSU’s William M. Gray and Philip J. Klotzbach, 2005 hurricane activity in the Atlantic Basin is expected to be “well-above average,” an upgrade from their early April prediction for an “above-average” hurricane season (see related story).

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