Despite word that a possible tropical storm could be swirling in the Gulf of Mexico as early as Thursday, natural gas futures traders put downward pressure on the October contract in Wednesday’s trade. The prompt month recorded a low of $6.160 before closing out at $6.180, down 38.8 cents from Tuesday’s close.

A low-pressure system in the Atlantic between the Bahamas and Florida has been identified and forecasters projected it would move across Florida and into the storm-building warmth of Gulf of Mexico waters sometime on Thursday. While some producers have already evacuated nonessential personnel from the Gulf and one production platform and one rig have been completely evacuated, no oil or gas production had been shut in as of late Wednesday afternoon (see related story).

“While we are definitely monitoring the Gulf of Mexico, the storm system that might become Tropical Storm Jerry just doesn’t look like it will be strong enough to damage Gulf infrastructure,” said a Washington, DC-based broker.

As for the market’s direction, the broker said the chance for lower prices is definitely still on the table. “Natural gas futures have been all over the board. We did achieve one of our key retracement levels on Tuesday around $6.700,” she said. “What will be interesting to see is if support will hold up. Based on Fibonacci retracements, we have support down at $6.100. So far, these retracement levels have been working beautifully.

“I think Wednesday brought in a little bit of profit taking. We are still in the summer season, but the heat going forward for much of the country doesn’t look that impressive. Demand is down. We’ve shut off our air conditioners, so I think demand is a little bit on the low side. Nobody — and I mean nobody — is concerned about storage. We are very comfortable there.”

Looking at the $5.249 low from last week basis the October contract, the broker noted that everyone wants to know whether or not the market has put in a bottom yet. “That is the million-dollar question right now and there are a lot of people out there thinking that this thing has one more run in it to the downside,” she said. “We might have covered enough shorts to begin our next wave down, but we will have to see. It is too early to say whether the bottom is already in because the market was pretty darn weak at its lows.”

Looking at Thursday morning’s storage report for the week ended Sept. 14, the broker said with so much gas in the ground, the report’s number is almost a moot point. She is looking for an injection in the 68-78 Bcf range, while the average expectation of a Reuters survey of 24 industry players is a 67 Bcf build. The number revealed Thursday morning will be compared to last year’s 95 Bcf injection and the five-year average build of 85 Bcf.

Some market technicians are looking for higher prices, but the path will not come easy. “Intermediate term, we are looking for further upside as part of a continuing pre-season rally,” said Walter Zimmerman of United Energy. Zimmerman compares the current dynamics to the pre-season rally of December 2006. He added that a comparison between this year and 2006 shows that any further advance is likely to be erratic.

“Parallels between the start of this presumed heating degree day pre-season rally from the $5.192 low and the start of the cooling degree day pre-season rally from the $5.740 low back in December 2006 suggest that this seasonal advance is about to get much more choppy and volatile. The easy money on the upside may already have been made,” he said in a note to clients. Zimmerman places near-term resistance at $6.710 and $6.810.

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