June natural gas is set to open 4 cents higher Tuesday morning at $2.08 as traders balance forecasts of increased usage with a softening technical outlook. Overnight oil markets retreated.

Market observers see the market in something of a holding pattern given the lack of a weather driver. "This wide-swinging sideways pattern is not unusual for the shoulder period given lack of strong weather influence," said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. "Nonetheless, even minor changes in the weather views that now stretch to beyond mid-month appear to be having an exaggerated impact.

"Bulls can continue to cite some recent production slippage that is finally seeing translation from the plunge in the rig counts. On the other hand, bears can indicate a near-record level of storage in which supply is roughly 48% above five-year averages and unlikely to see much contraction as this month proceeds. Meanwhile, burdensome coal supplies are tending to limit additional coal to gas substitution in restricting electric generation demand increases.

"At the end of the day, lack of sustainable price direction appears to be limiting speculative participation with the money managers slowly reducing bearish exposure regardless of weekly price swings."

Forecasters are calling for both increased heating and cooling load. "The six-10 day period forecast features above average temperatures across much of the central and eastern U.S. into the Northwest," said WSI Corp. in its Tuesday morning report. "The Southwest and Four Corners are expected to be cooler than average. [Tuesday's] forecast is cooler than yesterday's forecast across much of the central U.S. and Northeast. The West Coast and south-central U.S. are warmer. CONUS GWHDDs are up 1.4 to 14.3 for the period. PWCDDs are up 0.3 to 17.6.

Technical analysts versed in Elliott Wave and retracement analysis see a possible interruption to the advance that has been in place since March. "Natgas has carved itself out a little up trend channel from the only 11% bulls (Market Vane) at the $1.611 low," said Brian LaRose, a market analyst at United-ICAP, in closing comments Monday.

"That up trend channel support line cuts today at the $1.970 level. The next two steps lower from there would be $1.835 and then $1.700 as the 0.618 and then 0.852 retracements of the $1.611 to $2.195 rebound."

In overnight Globex trading June crude oil fell 42 cents to $44.36/bbl and June RBOB gasoline shed 3 cents to $1.5289/gal.