July natural gas is set to open 2 cents higher Wednesday morning at $2.93 as changes to the weather outlook are in the moderately cooler direction, but models show considerable variability. Overnight oil markets rose.
"The forecast sees a small change in the cooler direction in the Eastern Half where below normal temperatures are widespread in coverage," said MDA Weather Services in its morning six- to 10-day forecast. "The coolest conditions are forecast in the early half as high pressure passes through, but some moderation is expected late out ahead of a shortwave low coming out of western Canada.
"There remains a bit of disagreement among the models with this feature and its impact on the Eastern Half trough from mid to late period, a factor which keeps confidence to the lower side of usual. Warmer changes were generally limited to the West, where aboves are favored."
MDA also reported that Tropical Storm Cindy, currently situated 265 miles south southwest of Morgan City, LA, will continue its movement to the northwest and likely make landfall at the Texas-Louisiana border Thursday morning. Maximum winds were 57 mph, and it was moving to the northwest at 7 mph.
"Cindy will bring tropical storm conditions to the key production areas starting [Wednesday] and continuing through Thursday, " the forecaster said.
"Based on satellite imagery, Cindy does not appear like a tropical cyclone. There is no convection in the vicinity of the center with convection well removed to the northeast."
Market technicians see the market needing to make a substantial rally in order for the bulls to reclaim any semblance of upward price movement. "Only hint of bottoming is some minor divergence on the 720 minute charts," said Brian LaRose, market analyst with United ICAP after Tuesday's close. His figures show that spot futures would have to climb back above $3 "in order to make a case for a recovery of some kind here.
"As long as NatGas can remain” below $3 “we will continue to favor a more substantial test of” the low $2.80s. If that doesn't hold, "the door will be open" for a decline to the mid $2.60s to low $2.70s.
In overnight Globex trading August crude oil rose 19 cents to $43.70/bbl and August RBOB gasoline gained a penny to $1.4283/gal.