Bullied by hot weather — both outside their windows, as well as in the latest forecasts — natural gas futures traders pressured prices off recent lows Monday and deposited the prompt month back above the psychologically important $3.00 level. At the closing bell, September had received the biggest boost of any contract, gaining 5.6 cents to close at $3.027.

Overnight Access trading got the market moving in bulls’ favor early Monday as traders returned to their offices to learn that hot and humid weather will be the rule for population centers in the Midwest and Northeast early this week. Temperatures are expected to surpass the 90 degree mark in places like Chicago, Washington D.C., Philadelphia, New York, and even Boston through midweek, and that put traders in the buying mood early Monday. The September contract reacted accordingly, narrowly missing a gap higher open when the regular trading session resumed at 9:30 A.M. (EDT).

Despite the positive open and bullish near-term weather outlook, the market was unable to sustain the rally, falling instead to a swarm of mid-morning long liquidation by institutional fund traders and locals. The September contract traded down to $2.945 at 11 A.M. (EDT), before quietly stair-stepping its way higher throughout the rest of the session.

However, the hot forecasts were not the only factors influencing prices yesterday. Also of impact were cash prices, which rallied on reports of as much as 5-6 Bcf shut in production over the weekend due to Hurricane Barry.

Looking ahead, Tim Evans of New York-based IFR Pegasus is waiting for a low risk point from which to re-enter the market. Having just been stopped out of his short position for a 14-cent gain, he does not rule out the possibility of the market checking higher before continuing lower. “While September futures were able to trade as low as $2.91 in Access trade, the open-outcry session was never able to crack the $2.94 low from Friday or the $2.933 low from July 20… The failure to spiral lower and the firm close reinforce these supports, preventing a test of the longer-term support we’ve been touting in the $2.40-60 zone. Prices may simply have to back up first,” he said.

If buyers are successful backing up prices, they will encounter resistance first at the $3.10-12 and again from $3.17 through last Thursday’s $3.21 high. A break through those levels could earn the prompt month another try a the $3.425 high from July 31, Evans reasoned.

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