March natural gas is set to open 6 cents higher Tuesday morning at $3.11 as traders note little change in the weather outlook and technical support for the moment holds. Overnight oil markets fell.
Forecasters noted little change to the ongoing pattern of mild temperatures. MDA Weather Services in its morning 6- to 10-day outlook said "Forecast changes were generally small and mixed in this period, trending marginally colder in the Northeast and Southwest and warmer in the Southeast. Otherwise, this period remains one of warmer than normal themes nationally as Pacific flow is enhanced by steady troughing over Alaska and a deepening low into the Gulf of Alaska.
"This results in a coverage of much aboves in the North-Central and aboves which span the Eastern two-thirds. In the wake of coastal disturbances, temperatures are expected to turn seasonal in the East in the second half, following a warmer start to the period there."
Analysts suggest the lack of seasonal weather and a likely switch back to storage surpluses is a tempting target for speculative short selling. "[T]he clarity regarding the magnitude or sustainability of any cold patterns has yet to be evidenced and until more definition is seen, this advance could prove similar to the brief price spikes seen on several occasions this year," said Jim Ritterbusch of Ritterbusch and Associates in a morning report to clients.
"As the heating season has moved into an advanced stage, the dynamic of a renewed and sustainable storage surplus has attracted the focus of the trading community. Although the surplus will likely contract appreciably with Thursday's EIA report, renewed expansion would appear likely beyond this week's release in containing upside price possibilities. While we can easily provide an argument for an additional price rally toward the $3.20 mark given an oversold technical condition, advances to beyond this level will require indication of one more severe cold spell that could force some renewed surplus contraction."
The Desk' Early View survey of 11 traders and analysts following EIA storage figures showed an average 153 Bcf withdrawal for the week ended February 3.
That compares to last year's 93 Bcf pull and a five-year average of 138 Bcf.
In overnight Globex trading March crude oil fell 30 cents to $52.71/bbl and March RBOB gasoline dropped a penny to $1.4999/gallon.