March natural gas is set to open 14 cents higher Wednesday morning at $2.82 as medium term weather forecasts turn colder with some models hinting at snow in the Deep South. Overnight oil markets were mixed.
By this time next week Old Man Winter will have re-appeared in the nation's mid-section if overnight model runs are correct. "The big story today is the continued strengthening of the upcoming colder period with overnight models trending especially colder with the next outbreak mid to late next week and carrying deeper into the 11-15 day period," said forecaster Commodity Weather Group in its morning report. "We did see some warmer changes today including Texas this weekend and some warmer East Coast shifts next Tue-Wed with a storm track change. Otherwise, after an intense surge of cold this weekend into the Midwest and East, we track another very significant cold outbreak into the middle of the country by the middle of next week.
"This second one has a much better opportunity to reach Texas and more of the Deep South (some models threaten snow from Dallas/Houston to Atlanta) next week. Signs of more variability in the 11-15 day have either been delayed or removed on various models, helping to extend the cold pattern longer and stronger through the final week of February too," said Matt Rogers, president of the firm.
For the moment snow has abated in New England, but physical buyers will still have to be on their toes. The National Weather Service in southeast Massachusetts reported Wednesday morning that "generally cold and dry conditions were expected [Wednesday]. Light ocean effect snow will affect portions of southeast coastal Massachusetts today into tonight. Nuisance light snow mainly for southeast New England especially Cape Cod and the islands Thursday into Friday. A more potent winter storm is possible for Saturday into Sunday. Below average temperatures for much of the forecast period...with an Arctic chill early next week."
In spite of Tuesday's healthy 8-cent gain, market technicians aren't convinced that a market bottom is anywhere near in place. "While I would not classify Tuesday's price action as an acceleration higher, it was constructive," said Brian LaRose, market technician with United ICAP. "The question now, can the bulls build some momentum? To even suggest a bottom is forming the .236 of $4.544 to $2.567 [market decline] will need to be exceeded. The .236 cuts at $3.034. On top of that, bulls will need to shift the technicals in their favor. [We] have no case for a bottom being in place otherwise."
In overnight Globex trading March crude oil fell 28 cents to $49.74/bbl and March RBOB gasoline gained fractionally to $1.5536/gallon.