October natural gas is set to open 2 cents higher Monday morning at $2.98 as overnight weather forecasts turned warmer for the Midwest. Overnight oil markets rose.
Forecasters are calling for increased warmth in the pivotal Midwest market. "The forecast trends warmer when compared to Friday's expectations, with these changes being largest late in the period in the Midwest where above to near much above normal readings once again emerge following a more seasonal start," said MDA Weather Services in its morning six- to 10-day report to clients. "Above normal temperatures average the period in the Midwest, with the Southwest likewise sharing in a steady coverage of above to much above normal readings.
"The East Coast, however, has high pressure limiting temperatures to seasonal levels, with risks perhaps leaning in the cooler direction in the Mid-Atlantic based on onshore flow and cooler GFS model output."
According to analysts, demand, weather-driven or otherwise, will take on increased importance in balancing the U.S. natural gas market. "U.S. natural gas production hit an all-time high this week at 74.5Bcf/d led by Northeast production, which also set a record of 25.3Bcf/d on Friday," said Tudor Pickering Holt in a note to clients.
"Sabine Pass LNG [liquefied natural gas] nominations were 2.9 Bcf/d on Wednesday, which implies that the plant is producing around, or even, above nameplate capacity." According to figures November Gulf Coast LNG was trading at a very strong $6.7/MMBtu. Make no mistake, U.S. supply is growing in 2018, driven by Northeast and associated (Permian) gas. Gas markets hoping the demand side stays robust to offset this inevitable surge of supply growth."
Tom Saal, vice president at FCStone Latin America LLC in his work with Market Profile expects the market to test last week's value area at $3.157 to $3.022 before testing an area of "minus development" at $2.987 to $3.010.
In overnight Globex trading November crude oil rose 53 cents to $51.19/bbl and November RBOB gasoline gained 2 cents to $1.6438/gal.