September natural gas is expected to open 4 cents lower Monday morning at $2.64 as tropical concerns diminish and the market is able to sidestep global financial turbulence. Overnight oil and equity markets plunged again.
Natural gas futures remained relatively unscathed Monday morning as world financial markets tumbled. Dow futures were down 660 points, fueled by panic in China markets as nervous investors jettisoned equity holdings. The Shanghai Composite index was off a gut-wrenching 8.5% at 3,209.91 according to Marketwatch as Friday's losses continued.
The falling market, along with recent devaluations of the yuan, added to concerns about the health of the Chinese economy. Much of the market's fall is attributed to entertainment stocks although Chinese box office revenue is rising 30% annually, and film quotas are set to be lifted in coming years, which is anticipated to continue fueling growth.
Even though short-term weather is supportive, prices seem influenced by expected stout increases in storage builds as longer-term weather moderates.
"The fact that this market is posting fresh summer lows at the start of this new week despite seemingly supportive weekend adjustments to the short-term temperature outlooks would appear to favor some further price weakening," said Jim Ritterbusch of Ritterbusch and Associates in weekend comments to clients. "Furthermore, this market appears unwilling to inject significant storm premium in response to TS Daniel and a couple of distant evolving storm systems that could eventually disrupt production activities in the Gulf Coast region.
"This heavy tone appears to be emanating from an ongoing lift in production, an unexpected upswing in imports and this week's unusually mild temperature trends that are apt to boost supply injections considerably next week. Furthermore, this week's build should be upsized by around 10-15 Bcf relative to the prior week's build. Finally, we see some bearish spillover from the petroleum complex in the form of margin call selling."
In its 8 a.m. EDT Monday report the National Hurricane Center (NHC) said Tropical Storm Danny had fallen to 35 mph and was located about 28 miles south of Guadeloupe. It was moving to the west at 12 mph, and NHC projected a course to the southern coast of Cuba.
In overnight Globex trading October crude oil fell $1.53 to $38.92/bbl and October RBOB gasoline shed 4 cents to $1.3433/gal.