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NatGas Rally Loses Some Steam Overnight; December Called 2 Cents Lower

After pushing through resistance and trading above $3.220 in the overnight hours, December natural gas was set to open about 2 cents lower Friday amid some warmer changes to the weather models later this month.

"The overnight data held on to a weather system and associated cold blast into the eastern United States Nov. 18-20, and was more convincing with a second one to follow Nov. 22-23,” said NatGasWeather.com in a morning update to clients. “However, most of the data was a little warmer for Nov. 25-26."

In the shorter-term, a cold blast sweeping through Friday and into the weekend is expected to moderate.

"A milder system will follow into the East Monday, but with mild high pressure gaining ground elsewhere across the country the rest of the week besides the far West, national gas demand will ease back to near normal mid-week," NatGasWeather.com said.

Bespoke Weather Services said it counted some gas-weighted degree day (GWDD) losses in the overnight data.

"Weather model guidance contained mixed risks overnight that have us less convinced we are breaking out today," Bespoke said. "The 14-16 day upper level pattern on most guidance appeared to show at least one more temporary easing in any cold across the middle of the country and into the East, with a trough propagating across the Midwest.

"Meanwhile, we saw modestly warmer trends in the medium-range with another temporary ridge but clear colder trends around Nov. 22 with model guidance beginning to converge on a clear cold shot then as well. The result is relatively mixed risks as we head into the weekend."

From technical standpoint, ICAP Technical Analysis analyst Brian LaRose said following Thursday's close that "the bulls are not out of the wood yet in terms of shifting sentiment" even after managing "to climb above the dense band of resistance stretching from $3.130 to $3.191.

"The next challenge for the bulls will be the $3.279-$3.432 neighborhood.”

In overnight Globex trading, December crude oil added 4 cents to $57.21, while December RBOB Gasoline fell fractionally to $1.8185/gal.

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