September natural gas is expected to open 6 cents higher Monday morning at $3.90 as near-term weather forecasts turn more supportive and traders discount the potential load destruction of Tropical Storm Cristobal. Overnight oil market rose.
Prices rose overnight as forecasters called for warmer temperatures. WSI Corp. in its morning outlook said, "[Monday's] six-10 day is generally a bit warmer across the Midwest into the East, as well as the Southwest. The Northwest and Rockies are a bit cooler. This is a function of the period shift and model trends. Confidence in this forecast is average based on rather good medium-range model agreement. As usual, there are typical technical and timing differences to note.
"The forecast may trend cooler across the northern tier, mainly the Northwest into the Upper Midwest. The southern U.S. has a slight upside risk, focused across Texas into the desert southwest."
The load-killing effect of Tropical Storm Cristobal may do its share to increase storage builds as it tracks to the north and northeast from its present position north of the Bahamas. At 8 a.m. EST, the National Hurricane Center (NHC) reported Cristobal was about 715 miles southwest of Bermuda and was moving to the north at 3 mph. Maximum sustained winds were 60 mph, and NHC projected that the storm would move up the East Coast, grazing the Carolinas, before turning out to sea.
Tom Saal, vice president at INTL FC Stone in Miami, in his work with Market Profile said, "Buyers be ready. Weekly Market Profiles shows untested value areas above current September '14 prices." He contends that utilizing untested value areas is a "great tool" for hedge trading decision making. He expects the market to test last week's value area at $3.842 to $3.815 before moving on and testing $4.159 to $4.037. If time permits, the market may test $4.422 to $4.326.
In overnight Globex trading October crude oil gained 18 cents to $93.83/bbl and October RBOB gasoline rose a penny to $2.6011/gal.