July natural gas was set to open about 1.5 cents higher at $2.964 Tuesday as the hot weather trends that showed up in Monday’s forecasts mostly held in the latest model runs.

Some datasets were a touch hotter and others slightly cooler, but most important, holding hotter trends for this coming weekend over the Midwest and East as well as with the hot upper ridge strengthening over the southern and central United States June 23-27.

Where the data has been hotter since late last week is this coming weekend into early next week, as a warm ridge sets up over the Midwest and Mid-Atlantic to add several cooling degree days (CDD) and Bcfs in demand as high temperatures reach the upper 80s to lower 90s, including in Chicago, NatGasWeather said.

“The pattern late next week still looks comfortable across the west, central and northern U.S. and thus is seen as neutral for national demand,” the forecaster said. “However, we still expect the hot southern U.S. upper ridge to gain strength June 23-28, which would result in highs of 90s and 100s expanding to dominate the southern half of the country, with some coverage of 90s also likely over portions of the northern U.S.”

With that said, the data continues to struggle on the exact placement of where the core of this hot upper ridge will set up in late June and will need refining, NatGasWeather said. It’s difficult to know if the late June pattern is hot enough to take out $3 on the summer strip, but it’s close, especially if the hot ridge the last week of June were to be more definitive in including the Midwest and East.

“Prices overnight are higher and nearing $3, suggesting the markets must view recent weather data as hot enough,” NatGasWeather said.

Indeed, the July and August contracts are “moving out significantly” this morning and cash prices have remained incredibly strong, “indicating that this is almost entirely a weather-driven market at this time,” Bespoke Weather Services said. Despite a couple of overnight CDDs losses, the forecast still remains quite bullish, with far more limited storage injections looking likely later through June.

“That said, balances remain unimpressive and we have seen injection expectations for next week tick up, as has been the case much of the last month as forecasts have verified a bit less impressive than modeled,” Bespoke chief meteorologist Jacob Meisel said.

With the strip clearly lagging, Bespoke sees the potential for a cash-led pop to pull the July contract over the $3 level, but any spike being difficult to sustain. “...there is short-term upside, but any rally above $3 is likely a strong short opportunity,” Meisel said.

EBW Analytics agreed that momentum from Monday's gains is likely to carry prices higher again early Tuesday, with the July contract retesting resistance at $2.98-2.99, as it did three times earlier this month. “Unless forecasts continue to trend significantly higher, resistance is likely to hold,” CEO Andy Weissman said.

Meanwhile, countering the bullish nature of forecasted heat is the potential for a sizable decrease in the year-over-year storage deficit when the Energy Information Administration issues storage figures, Mobius Risk Group said. Market expectations are for an inventory report in the mid to upper 90s Bcf, which would be roughly 2 Bcf/d larger than the same week last year.

“Reductions in the year/year storage deficit (800 Bcf) have recently caused tests of downside price support, and with the market net long 193,000 contracts, sidelined bears may be looking for re-entry opportunities. Looking ahead there is the potential for a three- to four-week stretch of similar data points,” Mobius Risk Group analysts said.

There is currently 1,817 Bcf in storage, and thus “an average injection of 73 Bcf per week would be needed in order for storage to reach the 3.5 Tcf mark ahead of the winter withdrawal season,” Mobius said. Over the 23-week period from June 8-Nov. 2 last year, weekly injections averaged 53 Bcf.

A simplistic view suggests each week would need to be 3 Bcf/d loose to the prior year’s comparable injection to reach the 3.5 Tcf threshold. As a result, “this Thursday’s storage report should not be considered a bearish indicator unless the injection is larger than 103 Bcf,” Mobius said.

Crude oil futures were set to open 8 cents lower at $66.02/bbl, while RBOB gasoline futures were called slightly more than a penny lower at $2.09/gal.