November natural gas is set to open 3 cents higher Friday morning at $3.08 as traders see a market feeding off gains made Thursday following the Energy Information Administration storage report. Overnight oil markets fell.
Analysts see the market riding momentum created off of Thursday's strong finish in the face of bearish fundamentals. "This market remains surprisingly well supported with momentum tilted bullish in view of the market's ability to easily absorb a bearish storage figure in yesterday's trade," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients.
"The 80 Bcf injection easily exceeded our expected 69 Bcf build in forcing a much smaller than expected narrowing in the supply surplus of only around 15 Bcf. A similar reduction in the surplus in next week's data would appear likely as supply increases gravitate closer to seasonal tendencies at this late stage of the injection cycle. We see the weather factor skewed bearish for now, with temperatures generally expected to be unusually mild during the next couple of weeks."
At 8 a.m. EDT Friday the National Hurricane Center (NHC) reported that Hurricane Matthew was 45 miles east-southeast of Daytona Beach, FL, and moving to the north-northwest at 13 mph. Maximum sustained winds were 120 mph. NHC projected that Matthew would continue to migrate up the east coast of Florida, Georgia and the Carolinas.
Forecaster WSI Corp. said, "Hurricane Matthew will continue scrape the Florida and Georgia coast [Friday] through Saturday morning with damaging winds, torrential rain, etc. During the weekend, Matthew will spin to the north-northeast just off the Carolina coast and brush these areas with gusty winds and heavy rain bands, while conditions will improve across Florida. This is a high-impact event and widespread multi day-plus outages are likely, including places like Daytona Beach, Orlando, Jacksonville, Savannah, Charleston and Wilmington. Flooding is also a concern due to 5-10-plus inches of rain and onshore wind.
"Matthew will likely get pushed to the east-southeast off the Southeast coast by a cold front by Monday and may drift back toward the northern Bahamas by Tuesday. The combination of a cold front and the flow around Matthew will drive high pressure into the majority of the South as the weekend progresses into the early next week. High temps will retreat into the upper 60s, 70s and 80s. Mins will dip into the upper 40s, 50s and 60s."
To the north, gas buyers for Friday and weekend power generation across PJM should be in good shape as temperatures are expected to be mild and wind generation ample. "High temps will drop into the upper 50s, 60s to low 70s, [and] mins will dip into the 40s and 50s. High pressure will promote fair weather and moderating temperatures by Tuesday. A south-southeast breeze to north-northwest wind behind a cold front will promote elevated wind generation today into early Saturday morning with output between 2-3 GW. Wind gen will subside and become light during the remainder of the weekend into early Monday," WSI said.
In overnight Globex trading November crude oil fell 13 cents to $50.31/bbl and November RBOB gasoline shed a penny to $1.4876/gal.