December natural gas is set to open 3 cents higher Monday morning at $3.14 as traders look beyond near-term weather outlooks calling for continued mild conditions in major energy markets. Overnight oil markets fell.
Medium-term forecasts are still coming in milder than normal. WSI Corp. in its Monday morning report said, "[Monday's] 11-15 day forecast is a little warmer than Friday's forecast, except for New England and Texas. CONUS GWHDDs are down one for Days 11-12 and forecast to be 70.5 for the whole period. This is still 18.7 below average. Forecast [confidence] is average as models continue to highlight a positive PNA [Pacific North American] driven pattern, and there are typical technical differences throughout the period.
"A positive PNA offers a colder risk across the southern and eastern U.S. The West and north-central U.S. could run even warmer during much of the period."
Consistent with the longer-term forecast, the National Weather Service (NWS) predicts below-normal heating requirements in major markets for the week ending Nov. 5. New England is expected to see 115 HDD, or 25 fewer than normal, and the Mid-Atlantic is forecast to experience 90 HDD, or 36 less than its normal seasonal accumulation. The greater Midwest from Ohio to Wisconsin is anticipated to endure 65 HDD, or 75 less than its normal tally for this time of year.
Bespoke Weather Services of Harrison, NY, sees the market "significantly more tight than we did last year at this time regardless, justifying the decent price rises year-over-year, but with December contract prices trading so far above cash prices something is likely going to need to give in the next couple of weeks be it a major cash rally or further selling of the December contract."
Those decent price rises have not gone unnoticed in the drilling and producing sector. Overall, five U.S. land-based rigs were put back in play during the week ending Friday, bringing the tally to 533 running. One rig left the offshore, making for a net U.S. gain of four to rest at 557 running. (see Daily GPI, Oct. 28). Two U.S. oil rigs left, but six natural gas rigs came back. The return of five horizontals and three directionals was offset by the departure of four vertical rigs.
In overnight Globex trading December crude oil fell 52 cents to $48.18/bbl and December RBOB gasoline eased a penny to $1.4469/gal.