The expiring June natural gas contract was set to open Tuesday about 3.6 cents lower at around $2.903/MMBtu, with weather models continuing to show long-range cooler trends taking the edge off after a hot May, according to forecasters. The July contract was set to open about 3.8 cents lower at around $2.925.
Bespoke Weather Services said guidance coming out of the extended holiday weekend offered few surprises, maintaining cooler trends after the first week of June.
“We did see some short-term hot revisions to the forecast across the South that will result in record or near-record cooling demand nationwide, but long-range forecasts continued to cool as cooling demand should fall back towards seasonal averages through the second week of June,” Bespoke said. “...Some climate guidance has trended a bit more supportive” for week three of the current outlook, showing “risks that cooling demand does begin to recover” during the final third of June.
Radiant Solutions said changes to its six- to 10-day forecast over the Memorial Day weekend “were largely in response to the remnants of subtropical depression Alberto being blocked into the western Atlantic” and impacting the East Coast during the period.
“This has temperatures falling into the below normal category for then,” while “cooler changes since Friday are also associated with an early to mid-period round of troughing over the Northwest,” the firm said. “Aboves remain favored from the Southwest to the Midwest, including much aboves in Texas.”
Radiant said its 11-15 day forecast continues to show above normal temperatures focused in the West and in the central United States.
“This includes much aboves to start the period in parts of Texas, but also variability for the Midwest and East, where a round of belows is forecast,” Radiant said. “Confidence remains on the lower side of usual, however, as models differ in their upstream Pacific/Alaska evolution.”
Milder forecast trends for days six through 15 of the latest outlook could bring bears back into the market after hot temperatures in May gave bulls the upper hand, according to EBW Analytics Group CEO Andy Weissman.
“With May going down as the second hottest in 37 years and the start of summer nearing, bears have been fleeing the market, with the net short position held by speculative investors falling by more than 60,000 contracts between May 8 and May 22 -- and undoubtedly decreasing further toward the end of last week,” Weissman said. “This shift in market control has emboldened bulls, prompting hopes that, with storage below normal levels, summer heat will spark a major rally.”
On the other hand, “if moderate temperatures continue further into June, bears are likely to start stepping back in,” according to Weissman.
July crude oil was set to open about 67 cents lower at around $67.21/bbl, while June RBOB gasoline was trading about 1.7 cents lower at around $2.1646/gal.