June natural gas is set to open 5 cents higher Tuesday morning at $3.06 as traders see an unfettered path leading to prices another 7 cents higher and weather forecasts turned slightly more supportive. Overnight oil markets fell.

Traders see the potential for continued movement higher, but longer term they view the recent advance within a bearish framework. "Although this market traded in the negative column through much of the session, we felt that futures did a good job of maintaining last week's strong gains," said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients Monday.

"Newly acquired longs are seeing no strong reason to accept profits at the present time given lack of significant chart resistance until about the $3.13 area per nearby futures. A surprisingly strong pace of power demand continues to provide a strong bullish backdrop and will likely remain as a supportive force at least until the next weekly EIA storage report is revealed.

"We will be looking for an injection of around 93-95 Bcf that would compare with last year's 106 build and the five-year average increase of about 86 Bcf. Although the shortfall against the averages will likely narrow to around 30 Bcf, the process of eliminating the remaining deficit could prove arduous in view of expected warm temperature expectations along the eastern seaboard through month's end.

"All in all, we are maintaining a neutral trading bias in suggesting against attempts to pick a top to this month's strong upside acceleration. But at the same time, we see more downside than upside potential from current levels, and we will be looking for a place to reestablish a bearish trading posture."

Forecasters are calling for somewhat more cooling load in their near-term forecasts. WSI Corp. in its morning six- to 10-day outlook said the period "is warmer than the previous forecast across a good portion of the nation due to recent model trends (albeit slightly cooler across the Northeast early in the period). As a result, period GWHDDs are down -0.1 to 6.6 for the CONUS. PWCDDs [population weighted cooling degree days] are up +2.9 to 31.3.

"Forecast confidence is considered near to slightly above average standards under good large-scale agreement between the medium-range models. However, there remain some localized uncertainty with the pattern as expressed by our clustering algorithm. The GEFS [Global Ensemble Forecast System] is promoting some upside risk to the forecast across MISO in through western PJM. The ECMWF is a touch more aggressive, with eastern PJM and southeastern U.S. warmer risks, with a cooler forecast across southern MISO in through the SPP."

In overnight Globex trading June crude oil dropped 73 cents to $58.70/bbl and June RBOB gasoline fell 2 cents to $2.0134/gal.