July natural gas prices were treading water ahead of Tuesday’s market open, trading just one-tenth of a cent lower at $2.922 as the latest weather models backed off some of the cooler risks in the long range, but increased them in the medium term.

Nymex July gas futures had fallen as low as $2.91, 1.3 cents below Monday’s settle, before regaining some ground and moving into the black just ahead of the open only to slip again. Traders appeared to be taking a wait-and-see approach for weather forecasts to become more clear after some overnight guidance backed off some of the cooler trends in the long range as the model was clearly too aggressive with the pattern transition, according to Bespoke Weather Services. Canadian weather guidance, however, still showed a more pronounced transition.

European guidance agrees more with the global ensemble forecasting models “that heat and warmth dominates at least through July 10 as we only gradually begin to see ridging build across the Pacific Northwest from there,” Bespoke said. The result is that into week 3, there should still be modest cooler risks, however, the long-range pattern transition to cooler weather that is expected to break natural gas prices lower has not yet arrived on most guidance.

As for Tuesday’s trading action, EBW Analytics said Nymex futures are likely to rebound modestly today with support for the July contract established above $2.90. With the morning model runs continuing to call for the ridge to start slowly regressing in week 3, range-bound trading is likely unless the expected pattern shift abruptly changes.

Friday, however, the Energy Information Administration is expected to release its monthly production report. “If production continues to grow rapidly, the August contract (which by then will be the front month) could challenge support as low as $2.77 during the first half of July,” EBW said.

Bespoke said that current spreads continue to indicate that any short-term heat is likely to be dealt by cash and prompt prices, indicating that any rallies should fail. There are, however, risks of a strong July options expiry today and contract expiry tomorrow.

“The cool risks we expect to finally help prompt prices break $2.87 are not yet apparent enough for us to expect support to break, and instead we would expect a more range-bound day overall,” Bespoke chief meteorologist Jacob Meisel said. Resistance from $2.97-$3.00 should easily hold without significant additional burn tightening, which is unlikely, while $2.87-$2.90 should temporarily hold until forecasts cool further or production keeps rising. Overall, risk remains to the downside into July, it said.

Crude oil futures were trading 25 cents higher at $68.33, and RBOB Gasoline futures were trading 2 cents higher at $2.0719.