December natural gas is set to open about 2 cents lower Tuesday, keeping Monday's 15-cent surge largely intact amid some mixed changes overnight in the weather data. Overnight oil markets were mixed.
Bespoke Weather Services said in a morning update some variation between models points to "a high volatility forecast headed into the trading day whereby we did increase short-term gas-weighted degree days (GWDD) and remain elevated in the long-range, but saw slight GWDD reductions in the medium-range and see further bearish risks in the long-range."
The gains to start the week have come as production has surged. PointLogic Energy modeled dry natural gas production above 76 Bcf/d for Monday, a total that retreated slightly to 75.7 Bcf/d Tuesday.
Dry gas production was down 0.4 Bcf/d from Monday “as declines in the Rockies and Gulf of Mexico are somewhat offset by gains in the Northeast," PointLogic said in a note to clients. "...In the Northeast, gains are led by the Utica, which helped propel the Northeast to a record breaking 26.5 Bcf/d of production.”
The Utica and West Virginia’s wet areas of the Marcellus producing areas “posted best-ever production” while Monday’s 8.8 Bcf/d of dry gas production from the Marcellus region in Northeast Pennsylvania also was a record, according to PointLogic.
After pushing the market into a new value area Monday, the bulls still have work to do to stay in control, according to analyst Brian LaRose of ICAP Technical Analysis.
"Yes, 3.059-3.064 was exceeded Monday. But there is not time to celebrate" with resistance ranging from 3.130-3.191 representing "the next challenge for the bulls," LaRose said. "Better this area of contention as well, then we can start entertaining a march to the 3.279-3.432 neighborhood and possibly beyond. Fail to clear this next band and the bulls risk letting the bears quickly regain the upper hand."
In overnight Globex trading December crude oil fell 6 cents to $57.29/bbl and December RBOB gasoline fell fractionally to $1.8243/gal.