July natural gas is set to open 7 cents higher Monday morning at $2.66 as weather forecasts call for greater cooling requirements in eastern and Midwest population centers. Overnight oil markets fell.

Weather forecasts turned warmer over the weekend. Commodity Weather Group in its Monday morning report said, "Demand increases are estimated thanks to warmer forecast changes this week and next, especially for the Midwest to East, but also at times in the South. While still not a major sustained heatwave, we find some hotter spikes at times, including an effort to push into the middle 90s in the lower Mid-Atlantic this upcoming Thursday-Friday period.

"The European guidance is leading the charge on the hotter side, with even some hotter risks to the East in the six- to 15-day range, while the Canadian-American have more variability to dilute period averages with only marginally above normal period temperatures for the East Coast," said Matt Rogers, president of the firm.

The National Weather Service is estimating above-normal cooling requirements for major markets for the week ended June 13. New England is expected to see 30 cooling degree-days (CDD) or 21 above normal; and the Mid-Atlantic including New York, Pennsylvania and New Jersey should endure 43 CDD, or 22 above normal. The greater Midwest from Ohio to Wisconsin is forecast to warm to 62 CDD, or 33 above normal.

Market technicians see the bullish case continuing to lose traction. "It is 'rally or else time' for natgas bulls with $2.540 the must-hold support and $1.880 the downside risk," said Walter Zimmermann, vice president at United ICAP. "Viewed seasonally this is not a great time for natgas bulls. The seasonal pressure for natgas points lower from mid-May to mid-August. It may seem like plenty of time to drop 70 cents from here, but that would also be a 25% loss in value from here. That would be a big move."

Mike DeVooght, president of DEVO Capital Management, a Colorado-based trading and risk management firm, is not taking any positions at present to manage client risk. "On a trade basis, we will stand aside for now and will continue to monitor the market," he said in a weekend note to clients. He is standing aside for trading accounts, producers, and end-users.

Tom Saal, vice president at FC Stone Latin America LLC, takes a somewhat more aggressive approach. In his work with Market Profile, he anticipates the market testing last week's value area at $2.665 to $2.607 "then test" $2.883 to $2.729, and "eventually" he expects a test of $3.082 to $2.986.

In overnight Globex trading July crude oil fell 19 cents to $58.94/bbl and July RBOB gasoline slipped a penny to $2.0190/gal.