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Forecasts Remain Mild, Yet November Seen 3 Cents Higher

November natural gas is set to open 3 cents higher Friday morning at $3.02 as weather forecasts retain their overall theme of warmth with only minor changes. Overnight oil markets surged.

"Forecast changes were small in this period, with any cooler adjustments associated with a round of low pressure through the Midwest late as well as in Southeast under high pressure," said MDA Weather Services in its morning six- to 10-day report to clients. "Otherwise, the period remains a warm dominated one nationally, with this being a result of Pacific flow downstream of a Gulf of Alaska low.

"With this comes a round of near strong aboves into the Midwest around mid-period as well as several rounds of wet weather into the Pacific Northwest. The Northwest is the one region on the cool side of normal, and still cooler risks exist here through mid-period.

Thursday's advance off the Energy Information Administration storage number might be the market's last hurrah for a while. Jim Ritterbusch of Ritterbusch and Associates said, "The temperature factor continues to tilt bearish with unusually mild temps that are broad based with limited CDD [cooling degree days] or HDD [heating degree days] usage expected.

“But with mid-October approaching, focus on HDDs will become the much more critical weather item and until some cold begins to show up within the one to two week outlooks, this market could struggle in pushing back to above the $3 mark. As a result, we are maintaining a cautious near term bullish stance as we suggest holding any long positions established at around current levels for accounts willing to risk to below the $2.79 level on a close only basis.”

In overnight Globex trading November crude oil gained 98 cents to $51.58/bbl and November RBOB gasoline added 4 cents to $1.6199/gal.

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