January natural gas is expected to open 3 cents higher Tuesday morning at $3.68 as continued cold revises near-term temperature outlooks. Overnight oil markets slumped.

Overnight short term weather models in key energy markets turned still colder. “The forecast trends significantly colder [Tuesday] in this period, particularly in the Upper Midwest and a result of a southward shift in the polar vortex feature over Canada,” said MDA Weather Services in its morning 6 – to 10-day report. “This feature is now expected to support temperatures falling into the strongly below normal category in places like Chicago and Minneapolis within the latter stages; although, model volatility lends uncertainty with the expanse and intensity of this cold push.

“While some brief moderation remains forecast out ahead of this next cold shot, the period composite has temperatures averaging on the cold side of normal from the Midwest to the East.”

For now the ongoing dynamic of continued and expanding forecast cold is likely to keep prices advancing. “[S]ome outlooks for next week are suggesting larger deviations from normal that appeared to be the case in some weekend models,” said Jim Ritterbusch in closing comments Monday.

“[T]he colder views appear unusually broad based across the U.S. As a result, EIA storage releases beyond this Thursday will be indicating some much larger than normal seasonal withdrawals that will be shrinking the supply surplus appreciably. We will also note that physical pricing in most areas is still being ramped up considerably in driving further strengthening into the gas curve.

“We still favor bull spreads anywhere along the 2017 portion of structure. But, we will continue to suggest accepting profits out of long March-short September 2017 spread positions at the 22 cent area. This particular spread inverted further today to the 20 cent area. On an outright basis we still view next resistance at the $3.67 area per nearby futures but would not be surprised by violation tomorrow if temperature views remain heavily skewed toward unusually cold patterns.”

In overnight Globex trading January crude oil fell $1.03 to $50.76/bbl and January RBOB gasoline shed a penny to $1.5424/gallon.