July natural gas is expected to open 4 cents higher Wednesday morning at $2.77 as traders begin to factor in expected government storage data showing increases falling short of historical averages. Overnight oil markets were mixed.

Analysts are preparing for a Thursday EIA inventory report that may show the first storage build of less than the five-year average in several weeks. Last week came close. For June 12 the EIA reported a build of 89 Bcf, slightly above the five-year average of 86 Bcf. For the week ended June 19, that may flip-flop. Tim Evans of Citi Futures Perspective in closing comments Tuesday said industry consensus seemed to be forming in the 80-83 Bcf range, but the five-year pace stands at 87 Bcf.

In its morning report, Natgasweather.com said it expects another couple of days of warmth over the Mid-Atlantic and Southeast, but as the July 4 holiday approaches, "additional Canadian weather systems and relatively cool summer temperatures are expected to continue into the eastern U.S...which we would view as quite bearish for weather sentiment. We expect high pressure will again try to build back over the eastern and northern U.S. as the first week of July ends, although the data is far from convincing on how much success it will have.

"[W]eather patterns will remain quite warm for another day or so over the South and Southeast, with cooling then following as additional Canadian cool blasts line up through the 4th of July holiday. If bearish weather sentiment is going to ease or end, hot high pressure over the West will need to prove it will shift north and east over higher population and stronger natgas demand regions, with the next opportunity not expected until around July 6-7th."

Market technicians see the market poised at an important juncture. "Technically, bears remain firmly in control. For that reason we have no incentive to add to long positions here," said Brian LaRose, a market analyst with United ICAP, in closing comments Tuesday. "However, $2.641-2.616 is just below.

"If this area of contention can provide support, we will have good reason to add to length. If natural gas cannot find support into this zone, we will be forced to reevaluate the downside risk. Prepare accordingly."

In overnight Globex trading August crude oil shed 3 cents to $60.98/bbl and August RBOB gasoline rose a penny to $2.0568/gal.