September natural gas is set to open 3 cents higher Friday morning at $2.58 as traders see little likelihood of aggressive selling going into the weekend. Overnight oil markets were mixed.
Traders are holding on to an upward bias for the moment. "We are maintaining a cautious bullish stance and would suggest holding any long positions established within the $2.60-2.65 zone," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients. "We are staying with the program for now by suggesting stop protection at the $2.52 level. We feel that selling in today's trade will be tempered to a large extent by the possibility of bullish adjustments to the short term temperature views within the weekend updates.
"But given the late stage of the cooling cycle, the temperature factor will be losing pricing punch going forward, with any significant price spikes heavily reliant upon a major storm event into the GOM. With these items in mind, our previous objective to the $2.89 area is looking increasingly out of reach, and we are adjusting our short-term objective to the $2.75 level. The spread curve is exhibiting some minor weakening but the front September-October switch remains supported at around a 5.5-cent contango. The inability to establish a new wide carrying charge for the summer has thus far been precluded by sizable cash price premiums against the nearby screen that are apt to remain intact through next week despite temperature moderation."
Gas buyers for weekend and Monday gas for power generation across the New York ISO will have their hands full. "Hot, humid and stormy summer conditions will continue the next few days [and] a heat alert is in effect," said forecaster WSI Corp. in a Friday morning report. "A south-southwest flow around high pressure off the East Coast and a frontal system will support warm and humid conditions across the majority of the state during the next few days. High temps will generally range in the 80s to mid 90s. Elevated humidity will hold the min temps into the mid 60s and 70s.
"Near to slightly higher than average Great Lakes water levels will continue to support short term hydro generation. Recent and expected rain with amounts of 0.5-2 inches-plus will boost streamflow rates during the weekend. A fluctuating south-southwest flow will support modest wind gen through the weekend.”
In overnight Globex trading September crude oil was flat at $43.49/bbl and September RBOB gasoline fell a penny to $1.3524/gal.