June natural gas was set to open Tuesday about 2.2 cents higher at around $2.763/MMBtu as forecasters pointed to medium-range cooling demand gains in the overnight guidance.
Bespoke Weather Services said it counted some overnight gas-weighted degree day (GWDD) additions thanks to increased cooling demand beginning within the next week.
“The main trend was for more sustained heat through the medium-term,” as an upstream Madden-Julian oscillation pulse “appeared a bit weaker with heat holding on across the country,” Bespoke said. “This would keep GWDDs from dipping as much below average and help sustain cooling demand in key demand regions. Climate models showed a transition to a cooler pattern into early June that would be rather bearish for prices if it were to develop, but the deterministic trends overnight were quite supportive and show increased heat risks into Week 3.
“...Recent forecast adjustments should be enough to firm up support around $2.70-2.72, as if these developments are sustained...we would see a bit more upside for prices moving forward,” the firm said.
EBW Analytics Group similarly attributed the early morning gains to the additional cooling demand appearing in the medium-term forecast.
“This morning’s weather forecast trends significantly warmer in the Southeast during days six through 10, increasing expected air conditioning demand,” EBW CEO Andy Weissman told clients Tuesday. “Days 11-15, however, trend milder over much of the country. There are also additional signs that temperatures may return to more normal levels near the end of the month.”
Looking at Monday’s 3-cent gain for the June contract, Weissman said the move higher was “technically driven. With support for the June natural gas contract holding last week around $2.70, traders made a run at trying to break resistance at $2.76-2.77. Monday’s close well below $2.76 suggests that, at least yesterday, support was lacking for a significant move higher.”
Radiant Solutions noted warmer changes to the Midwest and South in its six- to 10-day forecast Tuesday in what “remains a broadly warmer than normal period nationally, including rounds of much aboves early from the southern Midwest to the Mid-Atlantic and again late from the Midwest to the East.”
In the 11-15 day period, Radiant reported cooler changes “focused from the Southwest to Central. This comes as models show another upper air disturbance tracking into the West early on, with the feature being less suppressed when compared to previous outlooks. Otherwise, this remains a warmer than normal period” for the nation overall.
June crude oil was set to open about 62 cents lower at around $70.11/bbl, while June RBOB gasoline was trading fractionally lower at around $2.1276/gal.