September natural gas prices remained in positive territory ahead of Wednesday’s market open, trading up 1.3 cents at $2.91 with no major changes in the latest weather guidance.

The overnight Tuesday weather model runs showed increased volatility in the medium range as guidance worked out the impacts of an upstream recurving typhoon, according to Bespoke Weather Services. If anything, in the seven- to 12-day period, the weather forecaster expects models to cool further, hence its more bearish expectations for guidance later Wednesday.

Other weather patterns, however, should allow some heat at least across the northern tier of the United States in the long range, where gas-weighted degree days may remain decently above average. “Any warmer period does seem brief, as there remain upstream reasons why cooler weather should win out to close out August, but a volatile back and forth between warmer and cooler regimes appears most likely through the month,” Bespoke chief meteorologist Jacob Meisel said.

As for Wednesday’s market action, EBW Analytics said the September contract is likely to post further gains as market bulls are hoping for another large storage miss. Cash prices at Henry Hub averaged $2.925 on Tuesday, and total cooling degree days are expected to remain near their highest level of the summer through the end of the week, also aiding a rally.

The Energy Information Administration (EIA) is set to release its weekly storage inventory report on Thursday, with early estimates pointing to an injection the upper 40 Bcf range. Inventories grew by 29 Bcf during the same week last year, and the five-year average build stands at 53 Bcf. As of July 27, stocks were at 2,308 Bcf, 688 Bcf below last year and 565 Bcf below the five-year average, according to EIA data.

“With temperatures in the south-central region reverting to normal levels last week, we expect the recent streak of major bullish storage misses to end Thursday, with an EIA-reported injection at or near consensus,” EBW CEO Andy Weissman said.

Furthermore, as the 11-15 day weather forecast continues to moderate, “if Thursday’s injection is close to expectations, today could be the high-water mark for balance-of-2018 natural gas futures,” he said.

Bespoke said it would be looking along the futures strip for indications of when prices may break down; October 2018/January 2019 narrowing would be a strong reversal signal, as would increased selling in April-October 2019 on any production increases.

With forecasts still not too impressive and medium-range cool risks lingering, “we would again see more downside risks today, especially following this surprise run-up,” Meisel said. He cautioned, however, that given the strength in the cash market, he would want to see some retreat on the cooler weather over the next few days before selling can be extended.

“Still, a $2.85 test this week remains quite likely, with $2.80 on the table” if Bespoke’s projected EIA print of a 50 Bcf build hits, Meisel said.

Crude oil futures were trading about 95 cents lower at $68.23/bbl, and RBOB Gasoline futures were trading nearly 3 cents lower at $2.0769.