September natural gas is set to open a penny higher Tuesday morning at $2.81 as traders see little significant change in temperature forecasts and technicians see the bearish luster fading. Overnight oil markets eased.
There was little change observed in overnight weather models. "No major changes are noted overnight and the net model adjustments over the past 24 hours feature mostly slightly same-day losses," said Matt Rogers, president of Commodity Weather Group. "The big picture themes are the same though with a cool-dominated one to 10 day pattern gradually re-warming in the 11 to 15 day.
"In the short term, the South and Northwest are both slightly cooler, while the six to 10 day offers some cooler changes in the West and slightly warmer in the South (Midwest to East close to flat/unchanged). The 11 to 15 day continues the similar battle between the faster warming American guidance and the slower evolution on the European.
"The big issue is the large heat ridge shift into Canada, which directs the hottest anomalies north of the U.S. border, leaving some weakness below it that could translate into more variability that limits the heat's return," said Rogers.
Traders see the weather factor diminishing as summer cooling winds down and the shoulder season approaches. "This market has shifted into a holding pattern during the past week with trade confined to about a 10 cent range with the market currently at about middle of the $2.75 - 2.85 parameters," said Jim Ritterbusch of Ritterbusch and Associates in a morning report to clients. "Negligible price change from a week ago is largely a reflection of short term one to two week temperature forecasts that haven't changed appreciably in about eight or nine days. Below normal trends are still expected to cover a broad portion of the US out to about the 22nd of this month in sharply reducing the impact of supply surplus contraction that has occasionally been supportive through much of this summer.
"And although this narrowing in the supply overhang appears sustainable through Thursday's” Energy Information Administration “release, we feel that an injection of less than 30 bcf may be required to kick start a meaningful price advance back toward the 2.90 area. With the summer winding down, the temperature factor will begin to diminish in importance with increased probability of hurricane activity into the” Gulf of Mexico “occasionally providing some price support."
In its 8 a.m. EDT report the National Hurricane Center (NHC) said Tropical Storm Franklin was crossing the Yucatan Peninsula and was located 95 miles east southeast of Campeche, Mexico. Maximum sustained winds were down to 45 mph and it was moving to the west northwest at 14 mph. NHC said it expected Franklin to reemerge in the Bay of Campeche and continue west.
In overnight Globex trading September crude oil shed 6 cents to $49.33/bbl and September RBOB gasoline dropped 2 cents to $1.6138/gal.