Natural gas futures were trading slightly higher early Monday as the latest forecasts hinted at a warmer-than-normal pattern setting up heading into the summer months. The June Nymex contract was up 1.6 cents to $1.839 at around 8:45 a.m. ET.

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The forecast showed lower overall demand compared to Friday’s expectations from a “quicker erosion” of cold spread across the Midwest and East, according to Bespoke Weather Services. This would see heating demand drop off more quickly and let “above normal temperature anomalies” start to set up for days six through 15 of the outlook period.

“We do not take this as bearish, however, as we believe this could be the pattern that sets up more often than not this summer,” Bespoke said. “So, here and now, above normal temperatures are not bullish in terms of demand, but in a few weeks they will move in that direction if this pattern indeed does hold.”

Meanwhile, the latest data on production and liquefied natural gas (LNG) exports appeared “stable” as of early Monday, according to Bespoke.

“We were interested to see if burns picked up any due to the strong cold, despite this being the month of May, but our preliminary data does not indicate much of a bump,” the forecaster said. “Demand still has not come back all that much from the economic shutdowns, or at least not enough to look bullish at the front of the curve.”

Looking at the supply picture, U.S. oil shut-ins have been “underwhelming” so far, according to analysts at Tudor, Pickering, Holt & Co. (TPH). The firm is revising up its estimates for associated gas supply for the second and third quarters.

This “presents a challenging summer for natural gas, with inventories pushing the high end of the five-year range,” the TPH analysts said. “Production currently sits at around 92 Bcf/d, and our revised May estimate now sits at 91.6 Bcf/d, up from 90.0 Bcf/d previously.

“For June, we’re expecting volumes to continue to decline to a monthly average of 89.7 Bcf/d (was 87.3 Bcf/d), which we forecast to be at the low point for supply, as shut-ins are expected to begin reversing out in July/August, with the crude strip currently sitting in the mid-to-high $20s.”

The outlook for 2021 remains “largely unchanged,” with TPH analysts projecting gas prices will rise to the $2.75-3.00 range.

“However, the path to get there now looks a lot more challenging” as inventories could exit the injection season at 4.0 Tcf, according to TPH. “As a result, we expect pricing to remain sub-$2 through the summer before beginning a meaningful recovery starting in the fourth quarter.”

Unseasonably cold weather to start the week could help the June contract “hold its ground” for another couple days, but the period from Friday through May 21 could bring an “astonishing” 65-70 Bcf drop in weather-driven demand, according to analysts at EBW Analytics Group.

This could begin a stretch of “monster injections” that could potentially push the year/year storage surplus above 800 Bcf, they said.

“As the market shifts its focus to the coming storage tsunami and additional LNG export curtailments are announced, the June natural gas contract is likely to come under considerable downward pressure, potentially testing new contract lows,” according to EBW.

June crude oil futures were up 3 cents to $24.77/bbl at around 8:45 a.m. ET, while June RBOB gasoline was trading 1.8 cents higher at around 97.0 cents/gal.