July natural gas is expected to open 8 cents lower Monday morning at $2.74 as overnight weather forecasts for key population centers turned more moderate. Overnight oil markets were narrowly mixed.

Not only did overnight weather models turn more moderate for key Midwest and eastern energy markets, but forecasters noted strong agreement among different models. "While we still have some lingering impacts of the departing hot pattern this week across the Midwest, South  and East (99 F forecast for DC tomorrow), the six-15 day period is dominated by the upcoming new pattern type, with heat ridging toward the Pacific Northwest, Western Canada, and out into the Gulf of Alaska. Southward extension into California provided some warmer to hotter changes to our forecast today," said Matt Rogers, president of Commodity Weather Group, in a Monday morning report.

"Otherwise, cooling trends and changes dominate today's weather update for the South, Midwest and East. The cool trough axis mainly sits over the Midwest and extends to the South (more toward Texas than Southeast), so this sometimes leaves the door open for briefly hotter spikes on the East Coast ahead of cold fronts. It would not be the consistent heat like seen in recent weeks, but we will have to watch for volatility. Otherwise, the models are in excellent agreement on holding this pattern through day 15 (July 6)."

Risk managers are keeping their powder dry. In a weekly note to clients, Mike DeVooght, president of Colorado-based DEVO Capital, said, "Moderate temperatures throughout much of the United States have kept demand flat. Natural gas has been range bound between $2.60 and $3.00 for the calendar year.

"Due to strong supply of natural gas along with the current demand outlook, we feel prices should continue to trade within this range. On a trade basis, we will stand aside for now and will continue to monitor the market."

Others see a near-term bias lower. "The short-term technicals still favor the bears," said Brian LaRose of United ICAP after the close Friday."So despite the rally Friday, we have little incentive to be buyers just yet. What could have us changing our tune? A move back above the $2.965-2.988 area would be helpful for starters. Barring a move above resistance or a bullish shift on the technicals would prefer to sit tight and wait for a more definitive entry signal, be it long or short."

In overnight Globex trading the expiring July crude oil contract rose 29 cents to $59.90/bbl and July RBOB gasoline slipped a penny to $2.0510/gal.