January natural gas is set to open 5 cents lower Tuesday morning at $3.28 as traders note at least a momentary end to progressively colder temperature forecasts and see a somewhat over-exuberant market. Overnight oil markets tumbled.

Weather models overnight were a mixed bag. “[Tuesday’s] 11-15 day period changes are mixed, but generally warmer or not as cold over the central and eastern U.S., but colder over the West for Days 11-14,” said WSI Corp. in its Tuesday morning report to clients.

“Most of the changes offset each other, so CONUS GWHDDs are only down 0.2 for those days and are forecast to be 146 for the period, which are 8.7 above average for a change!”

For the moment traders are willing to focus on short term temperature outlooks at the expense of record storage. “This market continues to spike as updates to the short term temperature forecasts are tilting further in the direction of the first major cold spell of this season that will be forcing a significant lift in HDD accumulation,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments Monday.

“We will reiterate that cold forecasts during the anticipatory phase of the heavy usage cycle can pack a lot of pricing punch and this sharp advance of the past couple of weeks is no exception. The fact that storage is at a record level and about 240 Bcf above five-year averages is a bearish consideration that is apparently being left for a later date when longer term winter temperature forecasts acquire more clarity. We will also note that much of this sharp price advance has been fueled by short covering that has been developing on almost a daily basis since mid-month as chart resistance points are being violated.

“The January contract …appears to have clear sailing until about the $3.45 area. The December contract went off the board somewhat firmer than we had expected in providing an additional bullish portent. All in all, this sharp price advance that is now into its third week is beginning to look overcooked especially if Jan futures push above the $3.40 mark. However, we suggest maintaining the long March-short September 2017 spread as we still expect an inversion to about the 11 cent area.”

In overnight Globex trading January crude oil fell $1.46 to $45.62/bbl and January RBOB gasoline dropped 3 cents to $1.3835/gal.