June natural gas is set to open 3 cents lower Tuesday morning at $4.38 as the longer-term weather-storage dynamic is seen giving the bears the upper hand. Overnight oil markets slumped.

Analysts are looking for stout injections to pressure prices in the upcoming weeks. “With the lower demand shoulder period setting up the market for notably larger storage injections ahead for at least the next few weeks, there’s no real stoutly bullish catalysts to act as a supporting mechanism to rally prices for the time being. With that said, it wouldn’t be out of the question for prices to test the $4.20s in coming days,” said Alan Lammey, analyst with WeatherBELL Analytics.

Lammey said a major source of demand for power load may be on the sidelines. “While there are seasonally normal temperatures across a bulk of the U.S., which is supporting prices to a degree, it’s important to note that nearly the entire Lone Star State is being engulfed with heavy rains, which is reducing the overall cooling degree days. This should increase the storage injections for the subsequent reflective storage reporting week.”

He also said weather-wise “the month of June doesn’t appear to be a bullish driver for prices either in terms of overall cooling degree days (CDD). Unless there’s some major shift in the fundamentals, I can’t see the price of gas futures (prompt-month) being much supported for now. In fact, it appears there’s more inclination for further near-term downside action than upside action at this juncture.”

In the near term, however, weather looks somewhat supportive. MDA Weather Services in its morning six- to 10-day outlook said the forecast “remains warmer than normal for much of the nation with outlook progressing fairly close to expectations from Friday as upper-level ridging remains stout across the northern portions of North America. The East Coast is a little cooler to start the period than Friday’s progression, a lingering impact of the cooler one- to five-day period, though marginal aboves make a return around the middle of the period.

“Above-normal temperatures are focused over the Midwest to the interior East ahead of a slight cool down over the Midcontinent as a weak upper level disturbance arrives late.”

Risk managers counsel holding current short positions. “Since storage is well below the five-year average, many analysts are concerned about the market’s ability to replenish storage prior to the winter season,” said Mike DeVooght, president of DEVO Capital, in a weekly note to clients. “Over the next couple months, the market will be quite sensitive to traders. The storage injection numbers will be watching the weather closely in the coming weeks for signs of above-average temperatures, that could slow the rate of injections this summer. If we get an average cooling season, we should see the storage gap steadily tighten through the Summer. On a trade basis, we will hold current short positions.”

DeVooght says trading accounts should hold current short positions originated when April was trading at $5.00 to $5.10. End-users should stand aside, and producers and those with exposure to lower prices should hold the balance of a May-October strip from $4.20 to $4.30 and also stay short the remainder of a second summer strip initiated at $4.50. The summer strip settled Friday at $4.389.

In overnight Globex trading July crude oil fell 7 cents to $104.28/bbl and July RBOB gasoline dropped a half cent to $2.9998/gal.