Natural gas for Wednesday delivery slid by a few pennies in Tuesday’s trading as mild temperatures forecast for eastern metropolitan areas along with weak next-day power prices gave buyers little incentive to purchase incremental volumes.

Overall, the market fell 3 cents to $2.30, but losses well north of a dime were common in the East and Northeast.

Futures managed a modest gain, but traders were wary as expectations center around a stout triple-digit increase in inventories anticipated in a Thursday government inventory report. At the close July had added 4.9 cents to $2.698 and August was higher by 4.8 cents to $2.725. July crude oil gained $1.06 to $62.16/bbl.

Traders see little upside for the July contract. “I think July will trade maybe up to $2.77 or $2.78, and I think we are at $2.45 to $2.50 on the downside,” said a New York floor trader. He added that weekly storage reports of hefty builds in the neighborhood of 120 Bcf or more were being circulated, “and that’s why I have a tough time with this market seeing a supportive rally. We may not even get to $2.77, and we may come in tomorrow with the market trading right around $2.64, $2.45 to $2.50 is the range for this month, and I think we’ll get there.”

In his view the funds and managed accounts might still have “a few more bullets to pressure the market lower,” he said.

Tuesday’s advance was only nominal, but “shoulder period-type temperatures are still largely intact despite forecasts for a renewed warming trend later this week with extension out toward mid-month,” said Jim Ritterbusch of Ritterbusch and Associates. “However, deviations from normal don’t appear sufficient to spur much buying interest and as a result, this market is obviously requiring lower price levels in order to encourage any commercial buying interest. For now, producers appear much more interested in protecting future output than users are in fixing future pricing. This has allowed the speculative community to re-enter the short side of the market with assertion as multi-week lows are posted.

“[Tuesday’s] trade provided no major surprises as the $2.60 support level held as anticipated. We expect further support tomorrow until Thursday’s EIA release offers further guidance. Given the strong likelihood that EIA will be indicating an injection as much as 25 Bcf above normal, we feel that even a bearish miss off of street guesstimates or more than 5-6 Bcf will be easily absorbed and followed by a renewed decline to as low as $2.54. By the end of next week, we look for nearby futures to achieve our longstanding target of $2.50 where we will look to begin considering the long side in anticipation of a lift in power demand as utilities shift back to the lower priced gas. For now, the weather factor still tilts bearish with mild temps expected this week and next in the process of offering at least 2 more triple digit injections that will likely be stretching storage surpluses further.”

In the physical market prices at eastern markets got little support as next-day weather forecasts called for below normal temperatures. Wunderground.com predicted Boston’s Tuesday high of 50 would reach 59 Wednesday and 64 by Thursday, eight degrees below normal. Philadelphia’s 55 high Tuesday was seen making it to 68 Wednesday, but easing to 66 Thursday. The seasonal high in Philadelphia is 73. Chicago’s 64 maximum Tuesday was predicted to rise to 72 Wednesday and reach 80 by Thursday. The seasonal high in the Windy City is 76.

At the Algonquin Citygate Wednesday deliveries slumped 21 cents to $1.45, and gas at Iroquois Waddington was seen 6 cents lower at $2.48. Gas on Tennessee Zone 6 200 L tumbled 69 cents to $1.49.

Gas bound for New York City on Transco Zone 6 skidded 55 cents to $1.83, and gas on Tetco M-3 shed a couple of pennies to $1.28.

Eastern next-day peak power prices also offered little incentive to make additional purchases for power generation. Intercontinental Exchange reported that at the ISO New England’s Massachusetts Hub Wednesday on-peak power fell $2.85 to $21.06/MWh and at the PJM West terminal next-day peak power fell $1.35 to $30.86/MWh. Wednesday power at the New York ISO’s Zone A delivery point (western New York) added 25 cents to $23.00/MWh.

Next-day gas at California points was mixed, but that might be a positive performance given the weak demand for gas in California. Gas at the PG&E Citygate fell 2 cents to $2.98, and SoCal border quotes added a penny to $2.52. Deliveries to SoCal Citygate added 2 cents to $2.65.

“May-to-date demand on SoCal has averaged just 2.17 Bcf/d, the lowest since at least 2007,” said industry consultant Genscape in a report. “One driving factor behind low demand has been below average temperatures, with May composite weighted average temperatures hovering slightly above 60 degrees at 60.09 degrees. Comparatively, the previous three year average temperature stands at 67.30 degrees and demand averaged 12% higher at 2.49 Bcf/d.

“The CAISO [California Independent System Operator] has also gone through many iterations of extending the Path 15 derate, ostensibly flooding the SoCal market with solar and wind and possibly knocking out gas-fired generation. The derate is expected to expire on June 2nd, during which temperatures are forecast to stay near current trends. Through the end of next week, gas demand in SoCal should pick up slightly to 2.28 Bcf/d with a slight upside risk.”

Weather-wise, Texas and points east are expected to see warmth next week. Commodity Weather Group in its Tuesday morning report said, “Preliminary estimates [Tuesday] are for a very slight demand loss compared to yesterday due to cooler changes in the one- to five-day range. Otherwise, some slightly warmer changes are noted in Texas and the South as well as along the East Coast next week. On the Texas story, we are finally getting a drier spell to enable that area to recover toward more seasonal high temperatures. Houston is projected to be in at least the low 90s all next week with near-90 degree weather around Dallas as well. Warmth at times in the Midwest and East is expected to be quite weak and ineffective in producing significant cooling demand.”