August natural gas is set to open 4 cents lower Friday morning at $2.78 as forecasts suddenly turn cooler. Overnight oil markets rose.

In its morning six- to 10-day forecast WSI Corp. said, “[Friday’s] forecast has trended several [degrees] cooler across the Great Lakes, whereas slightly cooler across the central and Northeastern U.S. when compared to yesterday. Forecast confidence falls to near-average standards as there’s excellent agreement between the models regarding the heat-up over the West, but there are timing differences with the cool over the East.

“Raw model guidance are showing strong warmer risks across CAISO when compared to the AM forecast and ensemble MOS products. Cooler risks are in store for the northern Plains, Midwest and Great Lakes and Northeast under a series of cool air masses to impact the East.”

Analysts see Thursday’s decline as not offering any trading opportunities, at least not yet. “This market briefly saw a price advance yesterday into our suggested $2.95-3.00 sell zone immediately following release of the EIA storage report,” said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients. “From here, some additional price weakness would be expected, given the adjustments in the temperature forecasts that are now calling for cooler than normal patterns across the upper Midcontinent that extend across the first week of August. These mild trends, if realized, should accommodate some larger storage injections than we had been plugging in for the next two to three weeks.

“While we had been assuming supply builds similar to those seen yesterday, it now appears that an upswing into the 70-80 Bcf zone could be seen for a few weeks unless production slips more than expected. Nonetheless, we don’t see either the commercial or speculative entities approaching the short side of the market aggressively at current levels. Despite yesterday’s selloff that has extended through the overnight trade, the market is only about 4 cents away from the midpoint of our expected $2.65-3.00 trading range. As a consequence, we will caution against fresh short entry at current levels given risk/reward ratios that approximate one to one at best.”

In overnight Globex trading September crude oil gained 17 cents to $48.62/bbl and September RBOB gasoline gained fractionally to $1.8115/gal.