March natural gas is set to open 3 cents higher Wednesday morning at $1.93 as traders factor in weather forecasts turning a scooch cooler in the Southeast. Overnight oil markets rose.
Overnight weather model runs showed changes in the details, but the overall picture continues. MDA Weather Services in its six- to 10-day outlook said, "Changes in this period were generally mixed and detailed, with the Southeast coming in colder within the second half. At that time, temperatures are forecast to fall below normal in the Southeast as low pressure tracking off the East Coast pulls in colder high pressure.
"There remains some uncertainty with the intensity of these colder temperatures with the forecast taking a blend of the often better performing ensemble models. However, operational guidance offer additional cold risk in the eastern half. Troughing south of the Aleutians will continue to feed ridging and warmth in the western half."
Risks to the forecast include a cold air damming setup which could leave the east colder on days seven and eight, and nearby troughing and high pressure presents colder risks in the Midwest late, the forecaster said.
The recent cold snap in the East presented pipelines with few problems. "Northeast production held its ground against this weekend's cold weather, showing few signs of freeze-offs or other cold-weather related operational problems," said industry consultant Genscape in a report. "Spring Rock daily pipe data shows total Northeast production did fall to a 14-day low on Sunday, coming in just above 22 Bcf/d. That itself was a nearly 0.3 Bcf/d drop from the day prior.
"Those declines appear to have largely taken place in Ohio (-0.2 Bcf/d DOD) with some volumes lost from West Virginia and Southwest, PA, too. However, such a swing in volumes during non-weather events is fairly common, too. Pipelines published OFO warnings prior to the weekend cold snap, but no notices were issued warning of production issues."
In overnight Globex trading March crude oil gained 90 cents to $29.94/bbl and March RBOB gasoline rose a half-cent to $0.9767/gal.