December natural gas is expected to open 10 cents higher Friday morning as a shift to cooler temperatures was noted for both East and West Coast population centers. Overnight oil markets skidded.
Futures rallied overnight as a mixture of rain and snow is expected over key energy markets and a cold front begins a trek across the West. "A cold front will move across the West Coast on Friday, while a trough of low pressure affects the eastern third of the country," said Kari Strenfel, Wunderground.com meteorologist, in a Friday morning report
"A strong low-pressure system will dip southeastward over the Great Lakes and the upper Midwest on Friday. This system will bring a mixture of rain and snow to the Great Lakes, the Ohio Valley and the higher elevations of the central Appalachians," Strenfel said. "Late-afternoon and evening rain will spread across the northern Mid-Atlantic and New England, while scattered showers and thunderstorms will be possible over the southern Mid-Atlantic and the Southeast. The central third of the country will continue to experience cool, dry conditions due to a large high-pressure system over the Plains and the Mississippi Valley. Temperatures will range between the 30s and 40s from the northern Plains to the upper Mississippi Valley.
"A strong cold front is expected to shift over the West Coast on Friday. This system will bring much-needed rain to portions of central and northern California, including high-elevation snow showers for the Sierra Nevada. Heavy rain will also develop over the Pacific Northwest, while the higher elevations of the Cascades will experience another round of snow showers. Late-evening showers will be possible over southwest California, while the Desert Southwest and the Great Basin will stay mostly clear of precipitation. Temperatures are forecast to drop 10 to 20 degrees as this cold front ushers a cooler air mass over the West Coast."
Traders caution that Friday's early strength will not have much staying power. "Although the market appears to be advancing off of a brief cold spell, the more extended six-14 day time frame still associates with above-normal trends that are beginning to stretch to mid-month," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday.
"As a result, we feel that at least three more injections could be forthcoming in the process of achieving our projected 3.6 Tcf supply peak later next month. With storage currently at 3.48 Tcf, storage builds during the next three reports would only need to average 40 Bcf if our peak is to be attained. The technical picture continues to show improvement following [Thursday's] violation of [October's] down trend line. But we would caution against following this rally until the temperature forecasts begin to show some shift toward colder trends. We are maintaining a neutral stance for now as we see staunch resistance at about $3.90 and long-term support at about this week's lows of about 3.62 per December futures."
In overnight Globex trading December crude oil fell 79 cents to $80.33/bbl and December RBOB gasoline fell 2 cents to $2.1385/gal.