August natural gas futures were set to open Thursday about a penny higher at around $2.880/MMBtu as forecasters over the Independence Day holiday noted warmer changes to the outlook for mid-July.

EBW Analytics Group’s Week 3 period (July 13-19) continued to add projected cooling degree days (CDD) over the July Fourth holiday, at the same time that Week 4 (July 20-26) has cooled off, according to EBW CEO Andy Weissman.

“Week 3 has continued trend hotter, gaining a whopping total of 9.6 CDDs and 15.4 Bcf of demand since last Friday,” Weissman said. “Week 3 may turn out to be the hottest week of the summer, with the highest demand. At the same time, however, the likelihood that Week 4 will turn much cooler has also continued to increase, with projected demand now 2.0 Bcf/d below Week 3.

“If the heat-up in Week 3 were the only major development, prices for natural gas might be soaring again. However, the market is already starting to look ahead to Week 4, and to the continued surge in production likely this summer. If the Week 4 forecast holds up, significant further declines” are likely for the August contract, while “upside price risk still remains if the intense heat in Week 3 extends to Week 4.”

Bespoke Weather Services said it lowered its overall gas-weighted degree day tally over the holiday, with hotter trends toward the middle of the month offset by cooler changes to the near-term outlook.

“A cool shot should move over the next couple days that will pull national cooling demand solidly below average, and we do expect these cool shots to become more frequent as we move through the coming weeks,” Bespoke said. “However, the pattern should similarly feature impressive ridging across the center of the country in the medium-range that will temporarily prevent any cooler weather, and that may linger into the long-range.

“…August natural gas prices dipped down to the $2.82 support level we had been watching over the holiday as expected, and found support there as models continued to show impressive heat in the medium and long-range,” the firm said. “…Production remains near record highs and a bearish” Energy Information Administration (EIA) storage report is expected Friday, “which should help any rallies fail as well. We may see resistance from $2.90-2.92 tested short-term, though a break of that appears unlikely unless we are able to continue” adding demand to the outlook.

NatGasWeather similarly observed cooler near-term trends overnight and said the data showed “bouts of cooling returning to the northeastern U.S. around July 17-20, shifting the core of the heat dome back towards the west-central U.S.” and making heat in the East less impressive.

“The coming pattern is still a rather bullish one with most of the country warmer than normal and with CDDs running very high versus normal when totaled weekly,” NatGasWeather said. “…Of course, daily production trends are also important as the markets have seemed to weigh them more heavily in previous sessions than hot temperatures and hefty deficits.”

August crude oil was set to open about 32 cents higher at around $74.46/bbl, while August RBOB gasoline was trading fractionally higher at around $2.1250/gal.