The expiring October natural gas contract is set to open 2 cents higher Wednesday morning at $2.94 as traders factor in still warmer near-term temperatures and likely expiration day short-covering. Overnight oil markets were mixed.
Overnight weather models turned still warmer. "Warmer trends continue for the first half of October with additional warmer changes today for the Midwest, East, and South in the six- to 10-day range while the West drifts a bit cooler yet," said Matt Rogers, president of Commodity Weather Group in a morning report to clients.
"There is still some trickiness on the East Coast for next week as the top European ensemble pattern analogs match the American/Canadian idea of a weaker cool wedge along the immediate coast that could hold the cities closer to normal. But those same analogs are still warmer than our outlook for the Midwest to provide more than enough demand offset."
According to market technicians versed in the vagaries of Elliott Wave and Retracement, "Bears have two levels to break if they are going to revive the case for another round of fresh lows," said Brian LaRose, analyst with United ICAP in closing comments Tuesday.
He said the market had to breach $2.88 and $2.75, and if these levels are taken out "we will have no choice but to dust off the case for a visit to the 2.500 neighborhood. As long as the bulls can prevent the November contract from slipping beneath these levels bulls still have a shot at salvaging the case for a bottom."
With the expiration today of the October contract Tom Saal, vice president at FCStone Latin America in Miami, says to "look for some short-covering on expiration today. Remember the old adage, 'on expiration, it's about who wants to make-or-take delivery.'"
Thursday's storage report is expected to reinstate the trend of a declining long term storage surplus.
The Deskin its Early View survey of 12 traders and analysts found an average 66 Bcf with a range of 60 Bcf to 75 Bcf. Last year 49 Bcf was injected and the five-year average stands at 84 Bcf.
In overnight Globex trading November crude oil rose 3 cents to $51.91/bbl and November RBOB gasoline shed 2 cents to $1.6311/gal.