November natural gas is expected to open 6 cents lower Monday morning at $2.95 as weather forecasts provided little in the way of upward stimulus and traders eye the short side of the market. Overnight oil markets tumbled.
Forecasters are calling for a variety of changes to the near-term outlook, but nothing significant enough to move the market.
"The forecast undergoes a mix of changes versus the Sunday Update, coming in warmer in the East and cooler in the Midcontinent and South," said MDA Weather Services in its morning six-to-10-day outlook for clients.
"The East carries much aboves, with the warmest conditions in the middle of the period with southwesterly flow out ahead of a deepening trough in the Midcontinent. The Midwest sees aboves/much aboves in the first half of the period before the aforementioned trough dives in and cools temperatures to near/marginally below normal levels late.”
The Global Forecast System “highlights potential cooler risks late. Models hint at development in the Gulf which will need to be monitored."
Directionally, risk managers are looking sideways to lower. The New York Mercantile Exchange was relatively flat last week, “but we continue to see basis levels deteriorate, especially in the West," said DEVO Capital President Mike DeVooght in a weekend note to clients.
"On a trading basis, we continue to look for the gas market to trade sideways to lower for the next three to four weeks. We think there is a good chance for the gas market to test its August lows in the next few weeks."
Tom Saal, vice president at FCStone Latin America, in his work with Market Profile said to look for the market to test last week's value area at $3.038 to $2.982.
In overnight Globex trading November crude oil fell $1.03 to $50.64/bbl and November RBOB gasoline skidded 3 cents to $1.5625/gal.