September natural gas is set to open a penny higher Tuesday morning at $2.80 as traders see only minimal changes to the temperature forecasts and mull an ongoing storage surplus contraction. Overnight oil markets retreated.

Traders are still grappling with how to factor in the latest cooler revisions to the temperature outlooks. “No significant changes are noted in the past 24 hours,” said Matt Rogers of Commodity Weather Group in a morning report to clients. “The six- to 10-day is a bit cooler Midwest, but slightly hotter across the South and Pacific Northwest again. The 11-15 looks more mixed overall, but still no major heat concerns for the eastern two-thirds of the U.S. with slightly cooler East Coast changes and slightly hotter Southwest adjustments.

“The big picture view of a mid-continent cool pattern, Western hot weather optimized to the north, and a seasonal/mixed East Coast prevail again. Changes are slightly cooler in the short-term for the mid-continent while slightly hotter for the coasts. The Pacific Northwest still aims for very hot weather the balance of this week with an all-time record tie still favored for Portland on Thursday (107F).”

Near-term the National Weather Service (NWS) is forecasting somewhat above normal cooling requirements. For the week ended Aug. 5, NWS is predicting New England will experience 59 cooling degree days (CDD) or 15 over its seasonal norm and the Mid-Atlantic should see 67 CDD or 9 greater than normal. The greater Midwest from Ohio to Wisconsin is expected to see 48 CDD or 8 fewer than its seasonal average.

Analysts see Monday’s price action as having created significant chart damage and admit that “shifts in the short term temperature views continue to provide primary price impetus and until the expected broad based cooldown that includes appreciably below normal temps across a chunk of the nation’s midsection are diminished, fresh lows would appear likely,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients.

“We viewed yesterday’s price drop to below the $2.80 level as suggestive of additional price declines to around $2.65 by week’s end if the weekly EIA (Energy Information Administration) storage report fails to offer price support. We feel that a supply build of less than 20 Bcf may be required to jump start a price rebound back to around last week’s high of almost $3.00. And although we expect the supply surplus against five year averages to drop to around 90 Bcf on Thursday, the bullish dynamic of surplus contraction has been easily overshadowed by unusually cool temperature expectations across key consuming regions of the U.S. into about the middle of this new month.”

In overnight Globex trading September crude oil fell 36 cents to $49.81/bbl and September RBOB gasoline dropped a penny to $1.6621/gal.