November natural gas is set to open 5 cents higher Tuesday morning at $2.88 as weather forecasts turned more seasonal, i.e. cooler, in key markets. Overnight oil markets rose.

“The forecast features a mix of changes in this period, most notably being cooler from the southern Midwest to the South,” said MDA Weather Services in its morning six- to 10-day outlook “This adjustment comes as a result of a stronger surface high pressing into these areas in the mid-period and allowing for temperatures to briefly approach normal. The Northeast, however, has a small warmer lean focused in the early stages out ahead of a cold front.

“The upstream pattern over the Gulf of Alaska features a deepening trough, resulting in increased moisture into the Pacific Northwest in the mid to late period. Overall, the period features broad A’s [above normal temperatures] in the Eastern Half.”

Analysts are taking a cautious but bullish approach to the market. “[T]his market appears to be running out of fresh selling given an oversold technical condition,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. “While the weather factor still appears tilted bearish given a lack of significant” heating degree day or cooling degree day “accumulation, the market is being forced to recognize a newly developed supply deficit.

“While this storage shortfall is miniscule and apt to narrow marginally to only around 20 Bcf with the issuance of Thursday’s storage report, we are maintaining a longer term trading theme that a lack of supply cushion will keep the front of the curve highly sensitized to any indications of an early cold spell. Although the deferred winter contracts within the first quarter of 2018 have been anchored by the usual weather uncertainties, we feel that the spot market at Henry Hub could easily spike on any weather related demand improvement. Furthermore, the leveling in U.S. drilling rig counts during the past couple of months is portending some downshift in gas production looking out into next year.”

In overnight Globex trading November crude oil rose 64 cents to $50.22/bbl and November RBOB gasoline gained 2 cents to $1.5748/gal.