November natural gas is set to open 4 cents higher Wednesday morning at $2.93 as medium term weather models overnight called for a moderate increase in heating load. Overnight oil markets rose.
"The latest 11-15 day period forecast is also not quite as warm as [Tuesday's] forecast over the south-central and eastern U.S.," said WSI Corp. in its morning report to clients. "The West and northern tier are a little warmer” with population-weighted cooling degree days “down 0.1 to 9.3.” Gas-weighted heating degree days “are up 0.5 for Days 11-14 to 27.7 for the whole period, which are 28.1 below average.
"The eastern half of the U.S. has a warmer risk early in the period, and the forecast could waver in either direction late in the period. But the GFS guidance offers a cooler risk over the eastern half of the” continental United States.
Tom Saal, vice president at FCStone Latin America in Miami in his work with Market Profile says to expect the market to test Tuesday's value area at $2.890 to $2.876. Market Profile is a breakout trading system and Saal says if initial balance points at $2.894 and $2.827 are breached look for trading objectives higher at $2.928 and lower at $2.794.
"Oversold daily stochastics provide a good buying signal for consumers, especially in a shoulder month," said Saal in a morning note to clients.
Stephen Kessler of Beacon Energy said, "I do think there are downside risks to the futures, but given the time of year we are in, a quick washout seems unlikely and sideways action after sell-offs is not a surprise for now. That will ultimately change as we get closer to winter if supportive weather does not pan out, but we are many weeks if not months from that point."
In overnight Globex trading November crude oil rose 11 cents to $51.03/bbl and November RBOB gasoline gained a penny to $1.6049/gal.