July natural gas is set to open 2 cents lower Wednesday morning at $4.61 as traders factor in a moderate Atlantic tropical storm season along with a possible cooler June August temperature outlook. Overnight oil markets rose.

Analysts saw Tuesday’s modest gains as rather generic. Tim Evans of Citi Futures Perspective said he thought traders were expecting summer air-conditioning demand and the occasional tropical storm running past production platforms in the Gulf of Mexico as reason enough to buy.

“While some of the recent day-to-day changes in natural gas fundamentals have helped support market sentiment, with one more named storm in the Atlantic hurricane forecast here and a somewhat warmer temperature outlook there, the larger fundamental trends remain bearish in our view.

“For example, the updated Colorado State University forecast for 10 named storms is still below both the 12 storm average and the 14 storm tally from a year ago. And with only 4% of US natural gas supply coming from the Gulf of Mexico, we note it is increasingly possible for storms to have a larger impact to onshore natural gas consumption than it has for offshore production. In similar fashion, forecasts for a warmer than normal June-August may still be noticeabley cooler than the five-year average,” Evans suggested.

Evans also expects to see “ongoing robust storage injections as likely.” He figures on a 122 Bcf build in Thursday’s report, ahead of consensus estimates closer to 115 Bcf.

Little change was reported overnight in a system of showers and thunderstorms over the Gulf of Campeche. The National Weather Service (NWS) in its 8 a.m. EDT report said upper level winds were likely to inhibit development and the most likely path would result in heavy rains over southeast Mexico. NWS said the likelihood of formation into a tropical system was unchanged at 10% over the next 48 hours and 20% over the next 5 days.

In a morning report NOAA said it expected a light Atlantic hurricane season as well with a probability of 70% of 8-13 named storms. 3-6 were expected to reach hurricane strength and 1-2 were expected to reach major hurricane status. Over the last 10 years the Atlantic has averaged 16.3 named storms, 7.7 hurricanes and 3.2 major hurricanesd, NOAA said.

In the physical markets industry consultant Genscape reported that productions trends will prompt California to have to compete for supply. “Current gas market balance is suggesting that North American gas production will continue to grow, but the geography of production, may not benefit California. The competition for California to compete with other regions will likely intensify.”

It noted that “Gas demand within California will continue to grow. The growing demand will test the inbound pipeline capacity.” Genscape said declining production from the San Juan Basin, steady Rockies and Canadian production along with increased flows out of the Permian will increase the competition California faces.

In overnight Globex trading July crude oil added 64 cents to $103.30/bbl and July RBOB gasoline gained fractionally to $2.9488/gallon.