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Bottom-Picking Ill Advised, Trader Says; December Seen 2 Cents Lower

December natural gas is set to open 2 cents lower Friday morning at $2.75 as weather models find consistent solutions elusive and forecasters call for ongoing relative warmth. Overnight oil markets fell.

Weather models just keep vacillating. "Regarding the latest  overnight weather data; no major changes with cooling still expected into the east-central U.S. for mid-November, although the weather models continue struggling on exactly how much cold air will ultimately arrive," said Natgasweather.com in a Friday morning report.

"Essentially, the weather data keeps teasing cold is coming but then fails to convincingly prove it. As an example, the overnight 00z GFS operational solution showed another flip to a milder solution after a colder midday run, although its ensembles remain relatively chilly. This continues to highlight inconsistencies that has plagued the weather models the past few weeks.

"Until then, warm conditions will dominate much of the US the next 10 days besides the Northeast and West Coast where weak weather systems will arrive into next week with modest cooling."

Traders are moving to the sidelines. "[A] weak close and fresh low territory keeps this bear move much alive and it now appears that longer-term trend line support will be tested at the $2.62 area within the next two to three sessions," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday.

"The only development that would alter this scenario would be a shift in the six-14 day temperature picture toward colder than normal patterns later this month. But such a development isn't showing up on the radar at the present time and as a result, some further sub-normal accumulation of HDDs may still require discounting.

“We continue to caution against attempts to pick a bottom to this dramatic 20% price decline that has developed unusually fast for the shoulder period. But at the same time, it is too late to participate in this down move from the short side for new position type trades. We have also shifted back to the sidelines.”

In overnight Globex trading December crude oil fell 25 cents to $44.41/bbl and December RBOB gasoline dropped 2 cents to $1.4079/gal.

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