July natural gas prices remained firmly in the red ahead of market open Tuesday, trading 4.3 cents lower at $2.908 as cooler trends forecast over the next week sent prices sliding for the second day in a row.

The Nymex July futures contract dropped about 7 cents to $2.951 Monday and had fallen as low as $2.905 before Tuesday’s open. EBW Analytics said Monday’s steep selloff was due in part to a further loss of projected demand during the day’s weather model runs. This loss of demand, however, was too small to explain the severity of Monday’s losses.

“Instead, the quick plunge of prices suggests that last week's penetration of the $3.00/MMBtu mark was a false breakout, due in part to computer-driven programmed trading,” EBW said.

Meanwhile, Tuesday morning’s weather forecasts were opening the door for additional easing of prices. The latest weather data suggested short-term cooling trends that would allow cooling demand to broadly be around seasonal averages for the next week or so (following intense heat on Monday), but long-term trends that would lead to significant heat to close out June and bring in July, Bespoke Weather Services said.

Short-term cool trends still remain a risk with a negative southern oscillation index and upstream positive North American teleconnection pattern that should help force cooler weather across the Midwest into the East, it said.

“Cooling demand below average for a few days looks likely accordingly,” Bespoke chief meteorologist Jacob Meisel said. “However, models are quite consistent with significant ridging building across the center of the country by day 10 that should return warmth to everywhere except potentially the far Southeast.”

Meanwhile, confidence in strong heat lingering into week 3 remained high, and this should help cancel out any slightly cooler trends in the short-term seen on weather guidance later Tuesday, he said.

EBW analysts agreed, noting the week 3 weather anomalies should limit the extent to which the July contract continues to decline this week, and “lay the groundwork for a modest rebound if Thursday's weekly storage report disappoints.”

Bespoke sees short-term downside for prices into support first at $2.92 and potentially even $2.87-2.90. It expects this short-term support, however, to hold and likely be a strong level for short-term long accumulation.

“Heat into early July should be intense and will further stoke storage concerns” even with less supportive Energy Information Administration data short term,” Meisel said. “We would want to see clearer signs of burns tightening to begin calling for a high confidence reversal, as loose balances with production recovering does keep seasonal risk lower now, but we do not see balance as enough to outweigh weather and would expect that though we test support today, it will be able to hold.”

Crude oil futures were trading 98 cents lower at $64.87, while RBOB Gasoline futures were trading 1.8 cents lower at $2.036.