August natural gas is set to open 4 cents higher Tuesday morning at $2.91 as traders focus on forecasts of warmth now coming into question. Overnight oil markets were mixed.

Much of Monday’s advance was predicated on warm temperatures and high humidity, but meteorologists at Genscape see that trend coming to a halt. “A series of load-killing storm systems are moving their way eastward across the Lower 48 this week, bringing an end to the brief run of above-normal temperatures that had run from coast-to-coast the past few days.

“Genscape’s met[eorological] team forecast has population-weighted degree days falling below normal levels through the end of the week. It should be noted, however, that near-term forecasts have been showing a high degree of interday variability, particularly in the Northeast and Pacific Northwest regions, which may be contributing to the heightened trading activity at price hubs there yesterday.”

Opinions vary on the strength and breadth of forecast heat. “The price advance of the past few sessions has been driven almost entirely by a shift in the short-term temperature views toward warmer than normal trends that are now extending into the final week of this month,” said Jim Ritterbusch of Ritterbusch and Associates in Tuesday morning comments to clients. “Overnight updates are favoring some warmer patterns than generally suggested yesterday. Furthermore, coverage extends broadly across most of the nation. As a result, Thursday’s storage injection that is likely to exceed five-year averages by almost 25 Bcf will likely be followed by a couple of normal to slightly below normal increases, perhaps down into the low 60s.

“We feel that a supply increase on Thursday of around our number [94 Bcf] has been fully priced and that a bearish surprise capable of forcing a return back to around yesterday’s lows ($2.79) may require a triple-digit supply hike that is certainly not off of the table. Any such surprises could be easily facilitated by weaker electric generation demand than expected and/or some holiday-inspired slippage in industrial demand that could also boost storage to stronger than expected levels.”

Tom Saal, vice president at FC Stone Latin America LLC in Miami, expects the broader consolidation patter to continue. In his work with Market Profile, he is looking for the market to test Monday’s value area at $2.875 to $2.847 and says to “eventually look for the market to test $2.792 to $2.766 and $2.711 to $2.669.”

In overnight Globex trading August crude oil added 4 cents to $52.24/bbl and August RBOB dropped 2 cents to $1.9206/gal.