November natural gas is set to open 3 cents lower Friday morning at $3.77 as traders see little in the way of supportive weather developments and envision the market trading at the low end of its ongoing trading range. Overnight oil markets recovered somewhat from recent selling.
Top traders are cautiously long the market with a tight stop. "Although our storage expectation was far off the mark given [Thursday's] 94 Bcf injection, the market's upside recovery after posting another round of fresh lows reinforces our short-term bullish convictions. For now, we are staying with the program of maintaining any long positions by keeping stops below $3.77 close only in referencing the spot month," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday to clients.
"The short-term temperature views don't appear sufficiently bearish to sustain price declines south of the $3.80 level, and we will look for the money managers to do some short-covering [Friday] ahead of a weekend that could bring some shifts in the weather outlooks. The supply surplus against five-year averages has now been cut to below 10%, and although we were off the mark in our storage injection for last week, the size of [Thursday's] increase fortifies our opinion of a storage peak near 3.6 Tcf that will likely be established later next month. All factors considered, we still view this market as trading at or near the low side of what we expect to be about a 40-cent range when looking out over the next two- to three-week time period," Ritterbusch said.
Weather forecasts changed little overnight, and Commodity Weather Group in its morning six- to 10-day outlook shows above-normal temperatures over the northwest one-third of the country with a modest accumulation of below-normal temperatures along the southeast U.S. trending from New Orleans to Norfolk. "A stalled upper-level trough next week along the East Coast continues to offer modest cool risks to the forecast for especially the East Coast, but it does cool the eastern Midwest and Southeast a bit more early in the six-10 day," said Matt Rogers, president of the firm.
"Otherwise, the pattern is still a variable one with more seasonal to warm ranges than not. The overnight guidance was mostly about the same or warmer than prior runs with still a very mixed Pacific picture that keeps the situation more complicated and uncertain. For the 11-15 day, about 36% of the European ensemble members show a cooler-than-normal period for the Midwest, East and South, while 64% of its members show a seasonal to warmer story. We continue to stake out the middle ground as it looks like there is room for at least some transient weak cooling mid to late period, but still no significant cold air connection to justify a stronger impact at this point."
In overnight Globex trading November crude oil added 80 cents to $83.50/bbl and November RBOB gasoline rose a penny to $2.2207/gal.