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Weather Outlook, Greeks Have Bears Stirring; August Seen 7 Cents Lower

August natural gas is expected to open 7 cents lower Monday morning at $2.75 as weather forecasts moderate and a stronger dollar ripples through energy markets. Overnight oil markets plunged.

Near-term weather outlooks continued to moderate in eastern and Midwest energy markets. WSI Corp. in its six- to 10-day outlook said that Monday's "period forecast is cooler than previous forecasts across the Southwest, Midwest and Northeast. The northern tier of the nation, as well as Texas are a bit warmer. Period PWCDDs are down 3 to 57.4. Forecast confidence is considered average at best today. Despite changes and uncertainty with tropical activity across the Pacific, medium-range models are in reasonably good agreement with the progression of the pattern.

"There are risks in either direction at this point. The GFS offers a risk to the cooler side across the eastern half of the nation late in the period. This guidance and a potential positive PNA [Pacific North American event] offers and upside risk across the interior West."

The combination of a soft weather outlook and turmoil in international financial markets following a Greek "no" vote was enough to awaken market bears. Although natural gas is not an international commodity the way oil is, a stronger dollar prompted weaker oil and in sympathy natural gas. According to figures, the dollar added 0.3% against a basket of currencies.

All in all, the overall market reaction was muted although U.S. stock index futures indicated Wall Street would follow European and Asian markets lower. However, there have been several worse days this year for markets vulnerable to events in Greece. Key will be the reaction of the European Central Banks and whether they elect to keep Greece banks afloat.

Mike DeVooght, president of DEVO Capital Management, advocates holding no market positions. "Moderate temperatures and adequate supplies continue to keep the gas market on the defensive. On a trade basis, we will continue to stand aside and await future developments," he said in a weekend report to clients.

DeVooght recommends trading accounts, end-users, and producers stand aside the market.

In overnight Globex trading August crude oil plummeted $2.38 to $54.66/bbl and August RBOB tumbled 6 cents to $1.9750/gal.

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