September natural gas is set to open a penny higher Wednesday morning at $2.70 as traders digest a moderate warm tweak to near-term temperature outlooks. Overnight oil markets were mixed, but equity markets rebounded.

Overnight model runs shifted warmer. According to Commodity Weather Group in its morning report, “The Midwest to East is same to warmer overall for next week going into especially the early 11-15 day, while we see some slightly warmer short-term West changes with cooler shifts next week.

“The South is slightly cooler in the short term into next week. The East Coast still has warmer to hotter risks next week with chances for more 90s than shown, but confidence struggles, especially late next week with risks for some cooling onshore flow,” said Matt Rogers, president of the firm.

Tim Evans of Citi Futures Perspective sees a moderate tightening of storage as the injection season winds down. “Although there’s risk that a larger than projected storage refill for last week or a change in the weather forecast will shift the storage outlook, our current base case scenario features a modest overall decline in the year-on-year average storage surplus from 80 Bcf as of Aug. 14 to 66 Bcf as of Sept. 11,” he said in closing comments to clients Tuesday.

Evans is looking for a 47 Bcf build in this week’s report. “A declining year-on-five year surplus confirms a moderate tightening of supplies on a seasonally adjusted basis, which tends to support a rally in prices,” he said.

Evans contends that natural gas is “conservatively valued” at the bottom of its five-year price range for this time of year, with only a moderate storage surplus. “In our view, this should mean less downside risk than upside potential, giving us at least a moderately bullish bias. Over the intermediate term, we think this could translate into a move to $3.25 or perhaps even $3.50 as a Q4 peak.”

In its 8 a.m. EDT Tuesday report, the National Hurricane Center (NHC) said TS Erika had strengthened moderately overnight. Erika was holding winds of 45 mph and was 335 miles east of Antigua. It was heading west at 17 mph and was projected to move toward Florida and the Bahamas.

Tom Saal, vice president at FC Stone Latin America LLC, in his work with Market Profile expects the market to test Tuesday’s value area at $2.682 to $2.660. Subsequent to that he says to go with weekly breakout ($2.696) or breakdown ($2.627) targets with the market “eventually” testing $2.785 to $2.747.

In overnight Globex trading October crude oil rose 47 cents to $39.78/bbl and October RBOB gasoline fell 2 cents to $1.2725/gal.