The expiring August natural gas futures contract is expected to open 3 cents higher Wednesday morning at $2.85 as near-term weather outlooks turned more supportive. Overnight oil markets eased.

Weather forecasts turned warmer overnight. WSI Corp. in its Wednesday morning report said, “The latest six-10 day period forecast is warmer than yesterday’s forecast across much of the nation, except the Northwest. As a result, PWCDD [population-weighted cooling degree days] are up 2.4 to 59.7 for the CONUS. Forecast confidence has improved and is average today. Medium-range models are in much better agreement when compared to yesterday, but there are still some technical and timing issues. The risk is to the cooler side over the north central and eastern U.S., even the West Coast.”

Gas buyers for power generation across the PJM footprint won’t be able to count on a lot of wind generation to offset purchases. “Seasonably hot and humid conditions are expected across much of the power pool during the next couple of days,” WSI said. It added that there would be a “south-to-west wind associated with the cold front [which] will support a boost of wind generation later [Wednesday] into tonight. Output is forecast to peak in excess of 2 GW. A variable westerly breeze will support modest wind generation during the end of the week into the weekend.”

Looking ahead to Thursday’s storage report, Tim Evans of Citi Futures Perspective said, “The consensus view is still forming, but estimates we’ve seen so far suggest expectations running in the 56-57 Bcf range, not too different from our own model’s 54 Bcf forecast. This will mark a seasonal reduction from the 68 Bcf inflow (prior to the 7 Bcf reclassification) from last week, but still modestly bearish compared with the 48 Bcf five-year average refill. With the warmer 11-15 temperature outlook, the forward storage prospects look a bit less bearish than a day ago.”

Evans’ data shows the year-on-five-year surplus growing from its present 81 Bcf to 87 Bcf by Aug. 14. “While still not a clear support for prices, we think this represents less of a headwind for price recovery, which may be enough to allow prices to rally from what we continue to see as a conservative valuation for natural gas trading near the bottom of the five-year range for this time of year.”

Evans has rolled his previous long August position to a long September after “we took a 10.9-cent profit on the related August trade. We recommend maintaining a protective sell stop at $2.72 to limit exposure.”

In overnight Globex trading September crude oil dropped 46 cents to $47.52/bbl and September RBOB gasoline fell a penny to $1.7395/gal.