September natural gas is expected to open 9 cents lower Monday morning at $2.85 as weather models turned cooler, sending estimated cooling load below seasonal norms. Overnight oil markets were mixed.
Overnight weather models turned sharply cooler. "[Monday's] six- to 10-day period forecast is significantly cooler than Friday's forecast over the majority of the continental United States, except the Northwest," said WSI Corp. in its morning report to clients. Continental United States population-weighted cooling degree days “are down 11.5 to 45.5 for the period, which are 7.7 below average.
"Forecast confidence is average as medium range models have come into reasonably good agreement with the development of an amplified pattern and influx of cool air into the eastern two thirds of the continental United States."'
Scott Shelton, broker analyst at ICAP Commodities expects this week to be "more of what we've been seeing lately" with the long range storage surplus taking another hit amidst strong demand.
The ICE end-of-storage futures market has been active lately and on Wednesday 200 trades went off between 3,768 and 3,790. "The 3,788-to-3,790 range had a huge cluster of trades around it. We note that the range is lower by about 5 Bcf each week for the past few weeks. This is a whopping distance from 4 Tcf," said Shelton.
"Nonetheless, if the weather peters out in the fall, as we think it might, and production remains robust, which we also think is a gimme, we could see one of the beefiest fall injection periods ever. The tally may not hit 4 Tcf, but 3.85 we see as a realistic mark, with record production through the winter.”
Mike DeVooght noted that last week the market made a successful test of support at $2.85, and "the gas market was able to rally back to prior week's settlement levels. On a trading basis, we will hold current hedge positions and will stand aside for speculators," he said in a weekly report to clients.
In overnight Globex trading September crude oil fell 26 cents to $49.45/bbl and September RBOB gasoline gained a penny to $1.6533/gal.