The expiring July natural gas contract was set to open Wednesday about 4.8 cents higher at around $2.987/MMBtu as overnight guidance was mixed but with one of the major weather models showing greater cooling demand over the eastern and central United States next month.

The August contract was set to open about 4.9 cents higher at around $2.980.

“The overnight weather data was mixed” with the Global Forecast System (GFS) “a touch cooler but with the European model notably hotter,” NatGasWeather said. “Most importantly, they both continue to advertise a hot/bullish pattern for much of the U.S. the next two weeks. The core of the most intense heat will be focused over the eastern half of the country late this week through the Fourth of July where widespread 90s to 100s are expected, including at times into major cities from Chicago to New York City.

“The latest data continues to favor the core of the heat dome shifting more strongly over the Southwest and Plains July 6-10, easing hot conditions over the East,” the forecaster said. “However, the European model was hotter overnight with the strength of the ridge over the east-central U.S. during this time to add numerous” cooling degree days (CDD), “while the GFS sees a little more cooling into the East.”

In trading Tuesday, the July contract set an intraday low of $2.907 before support held, which EBW Analytics Group CEO Andy Weissman said could set the stage for a move higher into expiration Wednesday.

“Warmer forecasts, with the one-to-15-day outlook gaining 4.5 CDDs and 4.4 Bcf of demand, may also help the front-month higher in this morning’s trading,” Weissman told clients Wednesday. “Particularly amid projections calling for a moderating medium-term outlook, the bulk of the warming in Week 3 -- 4.1 CDDs -- may help give bulls the upper hand” in Wednesday’s session.

“With volume increasingly concentrated in the August contract, it is possible that July futures may make a late run at the $3.00/MMBtu mark into the close,” he said. “Any gains in today’s trading, however, are susceptible to be quickly reversed” on Thursday as the August contract takes over as the front month.

From a technical standpoint, conditions still favor the bulls despite seasonal headwinds that suggest a move lower, ICAP Technical Analysis analyst Brian LaRose said.

“While the seasonal cycle typically points down” for natural gas “this time of year, I see little reason to favor such a retreat until/unless the bullish model can be eliminated,” LaRose said. “To void the bullish model the bears need to force the August contract beneath $2.867-2.854-2.853-2.848-2.846 and $2.795-2.792. Meanwhile, to revive the up trend the bulls just need to send natural gas surging through $3.011-3.021.”

August crude oil was set to open about 60 cents higher at around $71.13/bbl, while July RBOB gasoline was trading about 2.2 cents higher at around $2.0966/gal.