October natural gas is set to open 3 cents higher Tuesday morning at $2.93 although observers note a less than supportive trading landscape going forward. Overnight oil markets were mixed.
Analysts are bearish in the near term. "[T]his late stage of the cooling cycle will be taking a lot of steam out of the temperature factor going forward, and the market may become reliant for price strength upon GOM production disruptions due to tropical storm activity,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments Monday.
"Several systems are currently churning in the Atlantic and have forced some storm premium into the market. But for now, we don't see a threat to GOM infrastructure. We are maintaining a near-term bearish stance and would suggest holding any short October positions established last week as we continue to suggest close stop protection above $1.93 on a close-only basis."
Overnight model runs changed little. "The models continue to vary on details over the next two weeks, but they all agree that the six-15 day pattern runs warmer than normal nationally with a focus on the Midwest to East as well as the South at times," said Commodity Weather Group in a Tuesday morning report to clients. "One nagging complicating issue on much of this guidance is the potential for additional tropical activity. The GFS [Global Forecast System] ensemble shows a tropical system off the Southeast coast next week that seems to be softening the heat in that area (cooling high temperatures but also softening the heat ridging over the Southeast). The European is in less support and hence, hotter for the Tennessee Valley and Southeast overall," said Matt Rogers, president of the firm.
The tropical Atlantic and Gulf of Mexico continue to be active, yet weather systems do not appear strong enough to impact Gulf infrastructure.
At 5 a.m. EDT the National Hurricane Center (NHC) reported that Hurricane Gaston was at 110 mph winds and was out to sea in the central Atlantic.
Likely load killer Tropical Depression 8 was headed to coastal North Carolina. It was 85 miles south-southeast of Cape Hatteras and was holding 35 mph winds. It was headed toward the north-northwest at 5 mph, and NHC issued a Tropical Storm Warning. Slow strengthening was expected.
Tropical Depression 9 was 305 miles west of Key West, FL, and continued to hold 35 mph winds and was moving to the west at 7 mph. NHC said to expect a turn to the north-northwest Tuesday, and a turn to north-northeast was expected Wednesday.
NHC was also following Disturbance 1, a weak zone of low pressure off the coast of Africa.
In overnight Globex trading October crude oil rose 36 cents to $47.34/bbl and October RBOB gasoline gave up a fraction to $1.3932/gal.