June natural gas was set to open Monday about 1.7 cents higher at around $2.728/MMBtu as forecasters were noting above-normal temperatures covering most of the country over the next two weeks.
Bespoke Weather Services said it tallied some gas-weighted degree day (GWDD) losses over the weekend as models showed short-range heat moderating later in the week, resulting in “key demand regions in the Gulf Coast and parts of the Midwest” trending back toward average. “We continue to see GWDDs around average through the next 15 days, with guidance still mixed on where the overall bias will be.” Heat risks in week three of the forecast “linger but are not as intense as they looked last week either…”
The front month early Monday morning was trading just above $2.70, “a significant support level whose break could bring $2.65 rather quickly,” Bespoke said. “We are contending with GWDD losses over the weekend and are not looking at any particularly bullish short-term catalysts, as a large injection on Thursday will then only bring larger injections through the ensuing few weeks.”
Radiant Solutions said its six- to 10-day (May 12-16) forecast Monday “trends cooler versus Friday’s expectations in the Midcontinent, but warmer changes precede a cold front through the southern Midwest and toward the East in the early half. Temperatures are forecast to reach much and near strong above normal levels out ahead of this front, including peaks in the low 90s for places like St. Louis on Saturday and Washington, DC, on Sunday.”
In the 11-15 day outlook (May 17-21), weather patterns offer “plenty of support for ongoing warmth beyond mid-month,” according to the firm.
Overall, the period “features a widespread coverage of above normal temperatures, with the exceptions only being readings closer to normal along the Gulf Coast and in the Northwest,” Radiant said. “While in good agreement on the warm pattern persisting, models diverge in the details.” The Global Forecast System “is warmer than its European counterpart in the North and along the Gulf Coast as well.”
The market has likely already accounted for the “significantly warmer than normal” temperatures forecast over the next few weeks, EBW Analytics Group CEO Andy Weissman told clients Monday.
“As May progresses, the two most significant market drivers are likely to be the potential for very large storage builds and forecasts for early June weather,” Weissman said. “The large builds are likely to weigh on prices.” Monday morning “there are also signs that the first half of June may not be as hot as earlier model runs suggested, increasing the odds that the June contract will test support at $2.62 later this month.”
June crude oil was set to open about 86 cents higher at around $70.58/bbl, while June RBOB gasoline was trading 1.8 cents higher at around $2.1320/gal.