September natural gas prices were set to open Monday almost 3 cents lower at $2.823 as the latest weather guidance was mixed but showed less sustained heat in the medium and long term.

European guidance showed the cooler risks into week 2 with below-average cooling demand in the South and some cooler risks moving in eventually across the Midwest as well, according to Bespoke Weather Services. This could even bring about a few periods of below-average cooling demand if it occurred.

Meanwhile, other weather models reflected more heat risks across the North/Mid-Atlantic, with average weather in the South and Southeast. “Week 3 forecasts actually appear slightly hotter with an eastern ridge, though climate guidance and the upstream pattern in the Pacific both show increased volatility this week and risk skewed cooler for future runs as well,” Bespoke chief meteorologist Jacob Meisel said.

EBW Analytics said the question at this point is whether the market will give more weight to bullish near-term conditions, or bearish conditions that are likely to return later this month. At least for the next three days, further gains are likely as blistering hot weather is likely to push up cash prices, it said. Further, traders who might otherwise short the market are unlikely to do so as long as the risk of another large storage miss remains.

Bespoke agreed that a cash-led bump was possible Monday morning as short-term heat was rather intense to start the week. Any cash-led buying, however, is unlikely to sustain, given cooling in medium- and long-range weather forecasts, and the firm said it would watch for resistance around $2.85-2.86 to be quite firm through the day. It would expect a test of $2.80 and maybe even $2.75 later in the week.

“Rather, we expect downside to open up in the coming few days as we watch for a larger injection to be announced on Thursday and production to recover through the week (especially starting tomorrow),” Meisel said. The Energy Information Administration’s reported 35 Bcf build into storage inventories for the week ending July 27 was the third straight bullish injection.

EBW also is looking for production to jump later this month as the Atlantic Sunrise pipeline project comes online. The 1.7 Bcf/d Transcontinental Gas Pipe Line expansion would clear a path for constrained gas in northeast Pennsylvania to reach markets in the Mid-Atlantic and Southeast. Partial service for 550 MMcf/d started up earlier this year.

At the same time, air conditioning demand will be entering a period of rapid decline, according to EBW. “These factors are likely to limit the duration of any further rally and keep additional price gains modest,” CEO Andy Weissman said.

Crude oil futures were trading nearly 90 cents higher at $69.36/bbl, while RBOB Gasoline futures were trading about a penny higher at $2.076.