July natural gas is expected to open 3 cents lower Tuesday morning at $4.62 as longer-dated weather outlooks call for a cool midsection of the country. Overnight oil markets rose.

Longer-term forecasts look for a cool middle of the country. Joe Bastardi of WeatherBELL Analytics in a monthly forecast said he is “confident that large-scale normal to below normal still rules the roost. Much of the nation between the Rockies and Appalachians will be cooler than normal [and] the coming El Nino is over-hyped.”

He added that it still continues, “but as I have stated many times, it is over-hyped. The water temperatures in the Pacific continue to have no linkage to the SOI [Southern Oscillation Index]. A look at the forecasted pressures in the Pacific for the next 10-15 days indicates there is no likely turn to a negative SOI on the way. Only the 1976 El Nino had the months of April, May and June with positive SOIs.”

Bastardi is having difficulty drawing comparisons. “At this time, there is very little linkage to any of the events we have seen for the past 30 years. The western tropical Pacific and Indian Ocean are quite warm, and there is little support for the warm water in the Pacific doing anything but running its course and then falling apart. There has been a recent downturn in the dailies, but looking at forecasted pressures, there may be yet another positive burst in the making. Because of the El Nino situation, we are flying blind with analogs. Along with 1976, I took the last two warm ENSO events (2002 and 2009) that followed strongly cold MEI [Multivariate ENSO Index, comprised of six Tropical Pacific variables] events. This gives us a July analog that is almost opposite of what I have.”

If warm spells ever come, the price reaction is likely to be exaggerated, according to Jim Ritterbusch of Ritterbusch and Associates. He said in a weekly report that last week’s price strength “appeared to develop amidst only minor adjustments in the short-term temperature views, and we feel that any significant hot spells that could begin to show up in the forecasts will receive an exaggerated price response. And without knowing where average street guesstimates for this week’s storage report will fall, we feel that odds will be favoring an upside price response to this week’s EIA data.

“We feel that a drop back to around the 100-105 Bcf injection area is likely. While such a number would again exceed five-year average builds by around 12-17 Bcf, the contraction in the supply deficit would be about half that seen in last Thursday’s release. Furthermore, the deficit against last year is unlikely to change appreciably. Stated differently, overall balances won’t be altered appreciably by this week’s data, and the market will still be focused on a shortfall against average levels of around 900 Bcf or almost 40%.

In overnight Globex trading July crude oil added 29 cents to $104.70/bbl and July RBOB gasoline rose a penny to $2.9975/gal.