June natural gas is set to open 3 cents higher Tuesday morning at $2.06 as traders see limited downside in the face of anticipated production declines. Overnight oil markets were mixed.

Analysts see the market supported by expected production declines even though the pace of decline is not as rapid as had been anticipated. “In the absence of any headlines, the market is relying upon production and demand shifts that can be grindingly slow when weather virtually becomes a non-item, as is presently the case,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning report to clients. “But while the dynamic of production slippage in natural gas may not be able to advance gas prices, it does appear capable of limiting price declines.

“Meanwhile, the cash market at Henry Hub is coming under renewed pressures as overnight cold spells across the upper Midwest will soon become a thing of the past in potentially pushing values back into the $1.80s. With spot discounts still more than 10 cents below the nearby screen, the large carrying charges extending out to next winter could see additional expansion in encouraging some speculative capital back into the short side, given highly favorable roll yields that enhance the appeal of long-term or investment-type trades.”

Weather forecasters hint at an upcoming warm pattern. In its Tuesday morning report, Commodity Weather Group forecasters said they “continue to track a warmer period for the East Coast in the second half of next week, with the potential for the first burst of 80s seen this month in the Middle Atlantic. Since it is still in the 11-15 day range, though, confidence continues to run lower than normal.

“The end of the European ensembles shows upstream pattern signals for cooler risks (more ridging around Alaska and the North Pole), but it still shows a warm ridge extension along the northern half of the U.S., which is a bit stronger than yesterday. That means the North could walk into June a bit warmer, but the South is still unsettled and cool-sided.”

The week’s heating load is expected to increase in major markets. The National Weather Service said for the week ending May 21 New England should see 63 heating degree days (HDD), or five more than the norm. The Mid-Atlantic was expected to see 67 HDD, or 23 more than its seasonal norm, and the greater Midwest from Ohio to Wisconsin was anticipated to see 64 HDD, or 15 more than its normal tally.

In overnight Globex trading June crude oil rose 11 cents to $47.83/bbl and June RBOB gasoline fell a penny to $1.6009/gal.