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April natural gas was set to open about 2 cents higher Wednesday at around $2.773 as overnight guidance continued to trend colder, including potential for more frigid temperatures to return in late March.
Bespoke Weather Services said it added a half dozen gas-weighted degree days to its latest 15-day outlook Wednesday.
“Overnight forecasts yet again saw heating demand additions in the medium-range and the long-range, as the long-range pattern continued to feature more cold risks than previously imagined,” Bespoke said. “Increased blocking across Greenland appeared responsible for risks that cold slides from the Midwest into the Northeast March 21 potentially through March 25.
“...Trends were sizably colder in the medium-range as well with the cold shot March 12-15, which should allow for a larger storage draw,” the firm said. The increase in projected heating demand is “further amplified by decreased warm risk into Week 3 to turn the weather picture for natural gas more bullish as we move through March.”
Radiant Solutions noted colder changes to both its six- to 10-day and 11-15 day outlooks Wednesday. In the six- to 10-day, “the forecast trends colder in the Midcontinent and the Mid-Atlantic, where a western Atlantic low early in the period pulls a colder air mass southward from Canada.
“This results in a round of belows through the Eastern Half, including much belows in the mid-period from the southern Midwest toward the Southeast.”
In the 11-15 day period, “the forecast features colder changes...focused in the mid to late period along the Northern Tier, where aboves only briefly make an appearance prior to mid-period but quickly give way to more variable themes,” Radiant said. “This comes as models further strengthen ridging over Greenland and Alaska since Tuesday.”
The overnight gains come after April added 4.5 cents in trading Tuesday as weather models have shown winter likely to linger well into March after a mild February.
“We’re still in the winter season, so we shouldn’t be surprised that we get this kind of weather and that we get a positive reaction to the price,” INTL FCStone Financial Inc. Senior Vice President Tom Saal told NGI Tuesday. “They were calling for colder weather in February, which didn’t happen...now we finally get some weather, but we’re coming up off a lower level than we would have if this had happened month ago.”
Saal said he would look for the prompt month to test $2.80 based on the latest cold risks.
“I don’t think the weather we’re seeing now is going to be enough to rattle the cage here,” he said. “You’ve got some momentum based off the colder weather, and the more weather you get, you should see more momentum.”
April crude oil was set to open about 22 cents lower at around $62.38/bbl, while April RBOB gasoline was trading about 1.2 cents higher at around $1.9448/gal.