July natural gas is set to open 6 cents higher Tuesday morning at $3.04 as traders factor in a modest warming trend over key energy markets. Overnight oil markets slumped.

“[Tuesday’s] six-10 day period forecast is a little warmer than yesterday’s forecast over portions of the central and eastern U.S.,” said WSI Corp. in its morning report to clients. “CONUS PWCDDs are up 2.4 to 53.1 for the period, which are 16.2 above average. Forecast confidence is a little better than average as medium-range models are in good agreement and have been consistent with the pattern flip that will drive summer-like warmth and humidity across the eastern two-thirds.

“There is localized uncertainty across the Midcontinent and South due to potential shower/thunderstorm activity, [and] even with the warmer changes to the forecast there are minor warmer risks over the Northeast.”

Top traders are keeping their powder dry for the moment. “We are still sidelined in this market on an outright basis as the recent price decline has exceeded our downside expectations,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. “It appears that this market will likely be able to place a price bottom once some significantly above-normal temperature trends begin to show up within the short-term views, a development not currently on the radar.

“As a result, our technical tools leave open the possibility of some additional price decline to around the $2.90 area where we would expect solid support regardless of the temperature views. So while we are looking for a place to establish a long position pending evidence of chart support, we have begun to advise longer-dated bull spreads such as long September ”17-short February ”18 positions. And given the oversold nature of this market, Thursday’s EIA storage report is more apt to prompt a bullish rather than a bearish reaction on an equivalent-sized miss.”

In overnight Globex trading July crude oil fell 14 cents to $47.26/bbl and July RBOB gasoline fell fractionally to $1.5338/gal.