December natural gas is expected to open 8 cents lower Tuesday morning at $2.13 as weather forecasts once again ratchet milder. Oil markets surged in evening trading.

Overnight model runs revealed a shift to warmer temperatures in more deferred forecasts. WSI Corp. in its Tuesday morning report said, “Large warmer changes have been made to the 11-15 day period forecast across most of the CONUS. These changes have resulted in a -6.8 GWHDD reduction for the CONUS to 111.8. Forecast confidence is considered slightly above average standards due to very good agreement with the models regarding the large-scale pattern, although there will be timing differences with cut off low pressure over the South.

“Colder risks are in place across the Southern tier, with warmer risks over the Northern tier of the nation under a classic El Nino-type pattern.”

Currently, traders are standing aside the market waiting for an opportunity to sell. “As the shoulder period winds down, this market will become increasingly sensitive to the daily updates to the one- to two-week weather views in the process of boosting volatility,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients Monday. “But while conceding to a new and lower trading range that was forced by Friday’s gap down into new low territory, we are still having difficulty building a case for sub $2 futures pricing especially with the upcoming rollover to the much higher priced January contract.

“December futures expire on Wednesday following an early release of the EIA storage report. We will be looking for a slight withdrawal of 2 Bcf that would compare with the five-year average decline of about 36 Bcf. By and large, we are still sidelined as risk/reward ratios appear unfavorable at current price levels. And although our preferred rally to the $2.60 level per the January contract may prove to be out of reach, we will await an advance of at least 15-20 cents from current levels before re-establishing a short position. Regardless, this remains a market that should be worked strictly from the short side.”

Tom Saal, vice president at FC Stone Latin America LLC, in his work with Market Profile expects the market to test Monday’s value area at $2.180 to $2.148 and then test $2.371 to $2.321.

In overnight Globex trading January crude oil rose 78 cents to $42.53/bbl and January RBOB gasoline added 4 cents to $1.3272/gal.