July natural gas is expected to open 3 cents lower Monday morning at $2.97 even though weather forecasts turned more seasonal, with above-normal temperatures seen across major energy markets. Overnight petroleum markets fell.

“After a cool one- to five-day, hotter conditions spread across the eastern half during the six- to 10-day period as troughing departs the East and ridging builds in downstream of a trough in the Northwest,” said MDA Weather Services in its morning report to clients. “This results in temperatures peaking at much above normal levels in the Midwest mid-period and in the East toward the end of the period.

“Models show decent pattern agreement, although the Euro remains cooler in the South where it has carried a cool bias lately. Models disagree with regard to how long the heat lingers late, with the GFS holding warmer anomalies than the Euro across the eastern half.”

Risk managers see additional weakness and are holding to previously established short hedges. “Natural gas closed the week sharply lower, hitting levels not seen since mid-February,” said Mike DeVooght, president of DEVO Capital. “A combination of average to below average temperatures forecasted for the next two weeks, technical selling and long liquidation when key support levels ($3.20) were broken, all contributed to this past week’s sharp break. The weekly storage numbers were also considered slightly negative, when it was reported there was a slightly larger build than anticipated.

“On a trading basis, we think there is a good chance of testing the $2.80-2.90 level on a spot basis in the near future. We will continue to hold our short spec position and producer short collars.”

Neither bulls nor bears can expect much help from near-term weather and projected heating and cooling loads. The National Weather Service (NWS) in its forecast for the week ending June 10 says that New England will see a combined 40 degree days (DD) or nine more than normal. The Mid-Atlantic, however, is expected to experience 27 DDs or seven fewer than its average, and the greater Midwest from Ohio to Wisconsin is anticipated to endure just 36 DDs or 10 fewer than its normal seasonal tally.

In overnight Globex trading July crude oil fell 28 cents to $47.38/bbl and July RBOB gasoline shed a penny to $1.5658/gal.