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Weather Models Moderate, Yet Irma Intensifies; October Called 8 Cents Lower

October natural gas is expected to open 8 cents lower Monday morning at $2.99 as weather forecasts call for healthy temperature moderation in key eastern and Midwest markets. Overnight oil markets were mixed.

Overnight weather models cooled. "Forecast changes were in the cooler direction and largely based on the increased probability for hurricane Irma to track toward the Southeast U.S.," said MDA Weather Services in its morning six- to 10-day report to clients. "Below normal temperatures are now forecast in result across the South and East, with changes from the Holiday report also being cooler from the Midwest to the East."

MDA cautioned that "there remains risk to the cool side of forecast in the Eastern Half and based on the GFS Ensemble model. In the West, the lingering influences from former tropical storm Lidia merging into the upper air pattern has changes being cooler here as well versus expectations from late last week.

"The risk lean is to the cool side based on the GFS model in the Eastern Half, but confidence is low due to lead time concerns in hurricane Irma's track. GFS is warmer in the Southwest/California.”

Analysts are not optimistic price wise going into fall. "Though producers slogged back to the shale plays in the Eagle Ford and elsewhere late last week, and power generators were mostly back up around the affected areas of ERCOT, demand (for gas and power) was painfully low throughout the region last week," said Scott Shelton, broker with ICAP Commodities.

"Of course, the western U.S. may have made up for much of this demand destruction last week, but given the cooler weather ahead for much of the central and eastern swath of the country, it's hard to be optimistic about prices heading into the Fall. Throughout the damaging winds and flooding last week, prices at Henry Hub hardly budged past the current range."

In an 8 a.m. EDT report the National Hurricane Center (NHC) said a trough of low pressure in the southwestern Gulf of Mexico could become a tropical depression in the next couple of days. The NHC puts its chances of becoming a tropical storm in the next five days at 70 percent.

An area of low pressure several hundred miles southwest of the Cabo Verde Islands may develop into a tropical storm as well. NHC says conditions are favorable for development and the chance of becoming a tropical storm in the next five days is estimated at 90 percent.

Category 5 Irma is about 270 miles east of Antigua and is heading toward the west near 14 mph, and this general motion is expected to continue today, followed by a turn toward the west-northwest tonight. On the forecast track, the dangerous core of Irma will move near or over portions of the northern Leeward Islands tonight and early Wednesday packing winds of 175 mph and this general motion is expected to continue into Tuesday, followed by a turn toward the west-northwest late Tuesday.  On the forecast track, the center of Irma will move near or over portions of the northern Leeward Islands Tuesday night and early Wednesday. Most, but not all models send Irma north along the East Coast, NHC said.

In overnight Globex trading October crude oil rose 64 cents to $47.93/bbl and October RBOB gasoline fell 6 cents to $1.6910/gal.

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