July natural gas is seen opening 5 cents higher Tuesday morning at $2.76 as weather models turned warmer overnight. Oil markets fell in overnight trading.

Weather forecasters are calling for increased warmth. "[Tuesday's] six-10 day period forecast is generally warmer than the previous forecast across a good portion of the nation, except the Northwest," WSI Corp. said Tuesday morning. "Period PWCDDs are up 4.7 to 51.6 for the CONUS, [and] forecast confidence is average today as medium-range models are in reasonably good agreement and fall into reasonably good agreement with a PNA [Pacific North America] pattern."

Risks to the forecast include the possibility that the northwestern U.S. might turn cooler under a negative PNA.

Analysts of a bearish outlook are willing to cut the market some slack but still see the market having to digest plump storage builds ahead, which are likely to force a retest of $2.50.

[Monday's] sharp 4.5% price up-spike highlighted the market's sensitivity to the hot weather factor that has generally been of limited significance this spring," said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients. "Weekend revisions in looking across the next seven to eight days are favoring some unusually hot temps across the Midcontinent and much of the eastern seaboard. This is conjuring up images of a sharp downsizing in injections to be issued by the EIA next week. But in the meantime, the market may still need to price in another triple-digit build on Thursday that could fall within the 105-110 range.

"This implied additional strength in the surplus against five-year averages will act as a limiter on additional price advances in our opinion. So while we will give the market some latitude in allowing for a further lift to about $2.72 overnight, we also still anticipate an ultimate decline to around the $2.50 area where we will look to accept profits on shorts prior to probing the long side."

Other traders are playing the short side of the market as well in the form of spreads. "Everyone knows the pain to the upside, so let's see how far it will go," a New York floor trader told NGI. "I like buying all the spreads," buying the deferred month, selling the nearby, "in here, October-January, October-November, but I thought that last time and it rallied for six straight days. It's funny until it is your money.

"The last time we were down here we had record short interest, and that's the only reason I think we are rallying, but with the record short interest, not even $3 is off the table."

In overnight Globex trading July crude oil added 89 cents to $59.03/bbl and July RBOB gasoline rose 2 cents to $2.0298/gal.