January natural gas was set to open about 4 cents higher at around $2.815 Monday, as forecasters were pointing to some potential cold risks in the long-range weather outlook.
MDA Weather Services said in its latest 11-15 day outlook that "cold conditions are expected to return across the Midwest and Northeast as a strong upper-level ridge builds into Western Canada and Alaska...allowing for a deep trough to settle over the eastern half.
"However, the forecast has warmed versus the Sunday update across the South and Mid-Atlantic as ridging over the western Atlantic aims to limit the southward progression of cold," MDA said. "Meanwhile, aboves remain prevalent in California and the Southwest. Models show decent overall pattern agreement, although the Global Forecast System has more cold across the northern tier while coming in warmer than the European in the South."
The bulls will look to rebound this week after January sold off more than 25 cents last week. The selling came as chilly weather failed to impress, and a rare December storage injection -- a 2 Bcf build reported by the Energy Information Administration (EIA) -- seemed to confirm impressions of a loose supply/demand balance.
"It's been many moons indeed since we've seen a natural gas storage build in December," analysts with ICAP said in a note to clients Monday. "No matter how small, a late-in-the-year build tends to throw a big wrench in the works for weeks to come."
Though forecasts leading up to the report "were generally off a bit, most were correct in pointing to the Midwest and South Central regions for the biggest potential sources of risk, given that both showed sweeping changes week on week."
The analysts said that considering "last week's surprise, we expect a bumpy ride this week as well, here again, from the Midwest and South Central regions. Last year, this same week, the EIA reported a triple digit draw (-123 Bcf); this time, we anticipate quite a bit less than half that number. Suddenly, the lower-than-average inventory tally for December doesn't look so bullish after all."
January crude oil was set to open about 15 cents higher Monday at around $57.51/bbl, while January RBOB Gasoline was trading fractionally at around $1.7190/gal.