December futures are expected to open 5 cents higher Tuesday morning at $2.80 as near-term overnight weather turned slightly cooler. Overnight oil markets surged.

Overnight weather models turned slightly cooler in the six- to 10-day period. “The big picture held steady state [Tuesday] with a transient cool to cold push in the six- to 10-day following a big cold front this weekend,” said Commodity Weather Group in its Tuesday morning report to clients.

“The short range one- to five-day comes in slightly warmer than yesterday for the Midwest, East, South, while the six- to 10-day edges slightly cooler to colder for the Midwest to South, while holding flat in the East Coast (cooler early next week, then warmer toward the middle). The West sees mostly warmer changes for that six- to 10-day also. While we continue to lean more toward the European ensemble side, the American and Canadian versions are colder than our outlook and a risk to watch,” said Matt Rogers, president of the firm.

Traders see the risk-reward balance tilted in favor of higher prices. “This market is seeing upside follow-through from yesterday’s approximate 4% gains per nearest futures,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning report to clients. “The price upswing is being accompanied by strengthening time spreads that appear to be pricing in a substantial uptick in next day Henry Hub gas pricing as temperatures turn much colder later this week and into next.

“While we feel that it is premature to call an end to this dramatic one-month bear move, especially since our indicators still suggest downside possibilities to the $2.40 area, the 2017 futures contracts now appear to possess more upside than downside price risk. But we would note that the severity of upcoming colder trends appears limited at the present time and will auger in favor of orderly price advances as seen this week rather than a dramatic price up-spike.”

Market technicians see the market set up for a healthy move higher, though not exceeding earlier highs.

“In Elliott Wave terms, the market is right on a break point,” said United ICAP Vice President Walter Zimmermann in closing comments Monday. “If it breaks higher from here, it definitely creates room to the upside. Any further upside and we will have a bear market correction of the most recent leg down.”

He said the Organization of the Petroleum Exporting Countries “and the strong dollar are likely to be in the way of new market highs. Cold weather will not solve the problem. The U.S. dollar is going to have to stop skyrocketing.

“Conservatively, I think we could see anything from $2.94 to $3.04,” he said.

The National Hurricane Center in its 7 a.m. EST report said it was following a broad area of low pressure over the southwest Caribbean. It rated the chance of tropical storm formation in the next five days at 80%.

In overnight Globex trading December crude oil jumped $1.22 to $44.54/bbl and December RBOB gasoline added 3 cents to $1.3064/gal.